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30 December 2004 GNiFi (as Owner)
 GORO NICKEL S.A. (as Project Manager)
   CONSTRUCTION AGREEMENT (Contrat de promotion immobilière)




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TABLE OF CONTENTS  
 CLAUSE
    
    PAGE1
    
    PURPOSE
    
    
    42
    
    SPECIFICATION OF THE ASSETS
    
    
    53
    
    CHANGES TO THE ASSETS
    
    
    54
    
    DUTIES OF THE PROJECT MANAGER
    
    
    65
    
    PERFORMANCE BY THE PROJECT MANAGER OF ITS DUTIES
    
    
    76
    
    PERFORMANCE OF THE WORKS  LIABILITY
    
    
    97
    
    ACCESS TO THE SITE  CUSTODY  RISKS
    
    
    108
    
    FORCE MAJEURE
    
    
    109
    
    INSURANCE
    
    
    1110
    
    TOTAL AND PARTIAL LOSS
    
    
    1511
    
    TIME LIMITS FOR COMPLETION OF THE ASSETS
    
    
    1512
    
    COMPLETION OF THE ASSETS  DELIVERY  CERTIFICATES
    
    
    1613
    
    DOCUMENTS TO BE DELIVERED TO THE LESSEE AND TO BE PUT AT THE OWNERS DISPOSAL
    
    
    1914
    
    COMPLIANCE CERTIFICATE
    
    
    2015
    
    TERM
    
    
    2016
    
    CONSTRUCTION COSTS
    
    
    2017
    
    TERMS AND CONDITIONS OF PAYMENT
    
    
    2118
    
    REPRESENTATIONS
    
    
    2219
    
    TERMINATION EVENTS
    
    
    25




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CLAUSE
    
    PAGE20
    
    TERMINATION
    
    
    2921
    
    LEGAL PROCEEDINGS
    
    
    3122
    
    WAIVER OF RECOURSE
    
    
    3223
    
    TRANSFER OF THE AGREEMENT
    
    
    3324
    
    CHOICE OF LAW  JURISDICTION CLAUSE
    
    
    3325
    
    INDEMNIFICATION
    
    
    3326
    
    COSTS AND EXPENSES
    
    
    3727
    
    AMENDMENTS
    
    
    3728
    
    NO WAIVER
    
    
    3829
    
    PARTIAL INVALIDITY
    
    
    3830
    
    CONFIDENTIALITY
    
    
    3831
    
    CONDITIONS PRECEDENT
    
    
    3932
    
    NOTICES
    
    
    3933
    
    LIST OF APPENDICES
    
    
    40




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THIS CONSTRUCTION AGREEMENT, DATED 30 DECEMBER 2004, IS ENTERED INTO BY AND BETWEEN:  (1)
    GNiFi, a groupement dintérêt économiquehaving its registered office at 37, avenue Henri
Lafleur, BP K3, 98849 Nouméa Cedex, and enrolled at the Register of Commerce and Companies of
Nouméa under number 204 C 749002, and represented by Khalid Ammari, duly authorised for the
purposes of this Agreement (hereinafter referred to as the Owner); and(2)
    GORO NICKEL S.A., a company incorporated under the laws of France, having its registered
office at 38, rue du Colisée, 75008 Paris, France, and enrolled at the Register of Commerce
and Companies of Paris under number 313 954 570, acting herein through and on behalf of its
branch (succursale) whose registered office is at 7 bis, rue Suffren, BP218, 98845, Nouméa
Cedex, New Caledonia, and represented by Yves Roussel, duly authorised for the purposes of
this Agreement (hereinafter referred to as the Project Manager), each a Party and together the Parties. WHEREAS:  (A)
    The Owner has been organised for the purpose of constructing, financing and leasing the
Assets which constitute a portion of the Plant. The Project shall be developed and operated by
the Project Manager. The transactions contemplated by this Agreement and the other
Transaction Documents are based on the special tax support available for Dom-Tominvestments.(B)
    In accordance with the Girardin Law, the Request for DGI Final Approval was filed with the
DGI. A preliminary approval of the Transaction was granted by the DGI by a letter dated May 4,
2001 and the DGI Final Approval is to be issued. The retrocession rate as calculated in
appendix 8 of the Lease at the date of this Agreement is higher than 80%.(C)
    In order to finance the construction of the Assets, the Owner shall:  (i)
    receive the Tax Advances from the Tax Investors pursuant to the Tax
Loan Agreement; and(ii)
    enter into the Loan Agreement.  (D)
    The involvement of the Owner being only financial, the Project Manager as project manager
under this Agreement and as Lessee has selected the site, procured the preliminary technical
studies, drawn up certain plans and various descriptions and estimates for the construction of
the Assets and has decided on the design and characteristics thereof.(E)
    The Substantial Completion Date and the delivery of the Assets to the Lessee is expected to
occur on or prior to December 31, 2008 (as such date may be extended to a date no later than
December 31, 2009 (subject to the satisfaction of the conditions in Clause 11.1(b))).
Substantial Completion shall be evidenced by the signature by the Project Manager and the
Lessee, on its behalf and on behalf of the Owner, of the Definitive Acceptance Certificate in
accordance with the terms of this Agreement. Page 3 of 74




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NOW THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:  0
    DEFINITIONS0.1
    For the purpose of this Agreement, capitalised terms and expressions (whether in singular or
in plural form) shall have the respective meanings given to them in this Agreement (including
Appendix 1) or if not defined in this Agreement shall have the meaning given to them in the
Lease.0.2
    In this Agreement:(a)
    headings of Clauses and Appendices are for ease of reference only and are not intended to
influence the interpretation of this Agreement; and(b)
    references to any agreement or any other document shall be construed as a reference to that
agreement as it may from time to time be amended, varied, supplemented, restated or novated
(but excluding any amendment, variation, supplement, restatement, variation or novation
contrary to any Transaction Document). 
  1
    PURPOSE1.1
    The Owner and the Project Manager hereby agree that the Project Manager will, on the Owners
behalf, carry out the Works by way of any contracts including (without limitation) contracting
agreements, sub-contracting agreements, purchase agreements and the Services Agreement
pursuant to the terms and conditions of this Agreement, as well as to carry out or cause to be
carried out any related legal, administrative or financial transactions related to the Works.Unless otherwise specified in this Agreement, this Agreement is governed by Articles 1831-1
to 1831-5 of the French Civil Code enforced in New Caledonia pursuant to order n°98-728
dated August 20, 1998.1.2
    The authorisations granted, the contracts executed and the Works undertaken or initiated by
or on behalf of the Project Manager prior to the date hereof in connection with the Works (the
Preliminary Works) are hereby ratified and the Preliminary Works shall be subject to the
terms of this Agreement as if they had been undertaken after the date of this Agreement.1.3
    This Agreement is entered into in the common interest of the Parties. However, the Owner
undertakes not to interfere, directly or indirectly, with the duties conferred on the Project
Manager.1.4
    The Project Manager represents:  (i)
    that it has selected the site, procured preliminary technical
studies, plans, descriptions and estimates for the construction of the Assets and
has decided on their design and specifications;  (ii)
    that it has not been provided with any information or study in
respect of the Land or the Assets by the Owner and that the specification of the
Assets and of the Works was drawn up by the Project Manager or its agents,
contractors or subcontractors; Page 4 of 74




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(iii)
    that, considering the expected modifications of the works
authorised by the Building Permit, it applied on or about 2 December, 2004 for a
new building permit in respect of the Plant; and  (iv)
    that it will obtain a new Operating Permit in respect of the Plant
at least 3 months before the Substantial Completion Date. 
  2
    SPECIFICATION OF THE ASSETS(a)
    The Works shall be completed and the Assets shall be delivered and commissioned in accordance
with this Agreement, the Administrative Authorisations, the Request for DGI Final Approval
(which the Project Manager is fully aware of), the DGI Final Approval (which the Project
Manager is fully aware of) and good engineering practices (les règles de lart).(b)
    In the case of any contradiction between the terms of this Agreement and the DGI Final
Approval, the DGI Final Approval shall prevail.(c)
    For the avoidance of doubt, any reference in this Agreement to commissioning the Assets is a
reference only to those commissioning works (in accordance with the commissioning and testing
procedures developed by the Project Manager) required to achieve Substantial Completion. 
  3
    CHANGES TO THE ASSETS3.1
    Conditions for changes to the Assets(a)
    It is hereby agreed that the Project Manager may, at its sole expense and risk, vary the
technical characteristics of the Assets or any component or aspect thereof, provided that any
such Variation or any other variation:  (i)
    will not increase the Construction Costs (unless, for the avoidance of doubt,
the costs of such Variation or variation are permitted under Clause 16.2);(ii)
    will not extend the time limits set out in Clause 11;(iii)
    will automatically be deemed to be approved by the Project Manager, as Lessee
under the Lease;(iv)
    will not affect the DGI Final Approval; and(v)
    with respect to a Variation only, has been previously notified to the Owner for
information purposes only in accordance with Clause 3.2(b).  (b)
    Notwithstanding the foregoing, in no event shall any Variation or variation adversely affect
the ability of the Lessee to operate the Assets in accordance with the Authorised Activities.3.2
    Authorisation of Variations(a)
    In the event of any Variation, the Project Manager shall obtain, on its own behalf and in its
name, all required building permits and other administrative authorisations and Page 5 of 74




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shall be liable for all claims filed and for all expenses incurred in connection with
obtaining such permits and authorisations.(b)
    The Project Manager shall inform the Owner of any Variation, no later than
15 Business Days prior to the date planned for the
filing of the Administrative Authorisations required
for such Variation. 
  4
    DUTIES OF THE PROJECT MANAGER4.1
    Generally(a)
    The Project Managers duties relating to the Works are set out in this Clause 4. Such
descriptions and lists are indicative and not exhaustive.(b)
    The Project Manager shall be responsible for ensuring that the Works are completed and the
Assets are delivered in working order in accordance with this Agreement and that all
administrative and legal requirements, contractual easements, authorisations granted by third
parties, Applicable Laws in New Caledonia, and good engineering practices (les règles de
lart) have been complied with.4.2
    Definitions of the duties The Project Managers duties relating to the Works are:  (a)
    General description of the programme  (i)
    definition of the Works programme;(ii)
    drawing up a provisional Works budget; and(iii)
    distribution of tasks to the Contractors and coordination of the Contractors;  (b)
    Legal and administrative duties  (i)
    all activities in relation to, when necessary, obtaining irrevocably, renewing,
maintaining or defending all the regulatory approvals, permits, administrative and
other authorisations and zoning agreements that are required under Applicable Law in
New Caledonia for the construction and the operation of the Assets and, in particular,
execution of documents relating to obtaining any Administrative Authorisation, as well
as any related renewals or amendments, verification of their issuance or any required
postage (affichage).The Owner shall cooperate with the Project Manager with respect to obtaining any
administrative authorisations in the event that its intervention or assistance is
requested by the Project Manager and is required in order to obtain any
administrative authorisation.The Project Manager shall take all steps necessary, if any, to protect the Owner
from incurring liability in respect of this Clause 4.2(b)(i). Page 6 of 74




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(ii)
    coordination of the preparation of all agreements required for the purposes of
carrying out the Works and, in particular, the preparation of agreements with third
parties;(iii)
    obtaining and maintaining the Insurance Policies in accordance with the terms
of this Agreement; and(iv)
    dealings with public authorities, ministerial officers and court officials in
relation to the Works;  (c)
    Financial management  (i)
    providing the Owner with reasonable information or documentation required for
the Owners book-keeping relating to the Works; and(ii)
    providing the Owner with any reasonable information or documents required by
the Owner for tax reasons and relating to the Works;  it being understood that compliance with this Clause 4.2(c) will not be onerous for the
Project Manager and will not require the Project Manager to produce documentation which it
would not, other than for this Clause 4.2(c), be required to produce;  (d)
    Technical management  (i)
    preparation, drafting and signature of contracts with the Contractors it being
specified, for the avoidance of doubt, that the Project Manager may cause such
contracts to be signed by any third party acting on its behalf and for its account;(ii)
    analysis of bids and selection of the Contractors;(iii)
    supervision of the Contractors;(iv)
    handover (réceptions) of the works, services or Equipment provided by the
Contractors if required under Applicable Law in New Caledonia;(v)
    managing relationships with the Contractors and supervision of the remedying of
defects identified at the time the Works are handed over, delivered or operated;(vi)
    commissioning of the Assets; and(vii)
    delivery of the Assets to the Lessee. 
  5
    PERFORMANCE BY THE PROJECT MANAGER OF ITS DUTIES5.1
    Project Managers duties The Project Manager: Page 7 of 74




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(a)
    shall determine and prescribe the manner in which the Works will be performed within the
Construction Costs and in compliance with the time limits set out in Clause 11;(b)
    shall be solely responsible for selecting the Contractors required to carry out the Works and
to commission the Assets;(c)
    in the event of the enforcement of Act of December 31, 1975 relating to sub-contracting as
applicable in New Caledonia in the context of this Agreement, shall ensure that the Owner is
in no circumstances liable under this Act;(d)
    shall be responsible for paying the Contractors;(e)
    shall comply with the safety regulations enforceable in New Caledonia or which arise out of
good engineering practices (les règles de lart) and shall procure that each Contractor
commits to comply with the Project Managers safety procedures;(f)
    shall procure that supplies and equipment are covered by the usual warranties in accordance
with good commercial practices;(g)
    must generally ensure compliance with Applicable Law in New Caledonia so that the Owner shall
not, in any way or for any reason, be liable in relation to such Applicable Law in New
Caledonia;(h)
    shall obtain the compliance certificate(s) (certificate(s) de conformité) referred to in
Clause 14;(i)
    shall enforce, if and when appropriate, the Contractors warranties; and(j)
    shall construct the Assets in compliance with all applicable Environmental Laws.5.2
    Management of the Works The Project Manager shall procure, under any agreement entered into with a Contractor, that such
Contractor carries out any work or duty in relation to the Works in a manner which is not
inconsistent with this Agreement and which is in compliance with Applicable Law in New Caledonia as
provided under this Agreement.  5.3
    Progress report (reddition de compte) The Project Manager shall draw up on a semi-annual basis from the date of this Agreement, and as
specified in Clauses 13.3 and 13.4, a progress report (in no particular or specified format)
stating the following details as at the date of the relevant progress report:  (a)
    the general progress of the Works on site including an indication of the expected Substantial
Completion Date;(b)
    a comparison between any Works expected to have been carried out and the Works actually
carried out;(c)
    any significant events in relation to the performance of the Works which have occurred
(either positive or negative); Page 8 of 74




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(d)
    a comparison between the overall expenditure expected to have been made and the overall
expenditure actually made in relation to the Works; and(e)
    any information relating to the application for and the issue of any Administrative
Authorisation.5.4
    Except to the extent that such information has already been provided to the Owner pursuant to
Clause 5.3, the Project Manager will provide to the Owner a copy of each report required to be
provided to the DGI in accordance with the DGI Final Approval. 
  6
    PERFORMANCE OF THE WORKS  LIABILITY6.1
    The Project Manager undertakes to comply with any contractual documents relating to the
Works, the Assets and the Land and any third party rights under such documents. As between the
Project Manager and the Owner, the Project Manager shall be deemed responsible for any harm
suffered in relation thereto.6.2
    The Project Manager is solely liable for the supervision of the Works.6.3
    If one or more of the Contractors breach their obligations under any such contracts, the
Project Manager may terminate, at its own expense, risk and peril, the contracts entered into
and may enter into new agreements in order to avoid any delay in the completion of the Works
and the Project Manager shall be individually liable for such expenses, risks and perils. It
may also call on any relevant bank guarantees.6.4
    The Project Manager shall remain liable for the performance of the Works by any Contractor.
The Project Manager shall be liable for the obligations and guarantees arising out of articles
1792, 1792-1, 1792-2, 1792-3 and 2270 of the French Civil Code if such provisions are
applicable to the Assets and shall remain liable as against the Owner for the conception and
the performance of the Works.6.5
    The Project Manager has a performance obligation (obligation de résultat) to the Owner:(a)
    to deliver the Assets on the Substantial Completion Date in accordance with Clause 12 and for
a price not exceeding the Construction Costs (subject to Clause 16.2);(b)
    to bear all risks (garde et risques) relating to the Works and the Assets until the
Substantial Completion Date;(c)
    to be individually liable to the Owner for any Loss which may be caused during the Works to
any individual (personne physique) or company (personne morale) as a result of the Works
or because of the existence of the Assets, or which is related to the construction process
throughout the duration of the Works;(d)
    to deliver the Assets free from any lien (droit concurrent) and free from any
non-compliance (non-conformité) or defect it being specified that the Assets may be subject
to any Permitted Lien, provided however that the beneficiaries from such Permitted Lien have
no right or interest to enforce them on the Substantial Completion Date; and Page 9 of 74




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(e)
    to cause the Assets to comply with the Production Test by no later than the Long-Stop Date.6.6
    The Project Manager is responsible for all prejudicial consequences which may result from any
defects on or in the Land, and from negative, apparent or latent easements, whether existing
or discontinued, which may encumber the Assets or the Land, as well as the commissioning and
the operation of the Assets.6.7
    The Project Manager in its own capacity and as Lessee represents and agrees that it shall
not, in any case, seek to make the Owner liable for any error, oversight, fault, defect,
inadequacy or any such event affecting the conception or the carrying out of the Works or the
Assets or the operation of the Equipment.It is agreed that this Clause 6.7 shall not prevent the Project Manager from filing any
claims against the Contractors.6.8
    If requested by the Owner, following the execution of any agreement with the Contractors, the
Project Manager shall provide the Owner with a copy of such agreement together with a copy of
any of the Contractors insurance certificates within 30 Business Days. 
  7
    ACCESS TO THE SITE  CUSTODY  RISKS7.1
    If any event adversely affects the Works or the performance of the Assets during the
Construction Period, the Owner shall be authorised, at the Project Managers expense, to
inspect the site and any document pertaining thereto. Any such inspections shall only be made
on a reasonable number of occasions, upon giving reasonable prior notice and up to a
reasonable amount of cost to the Project Manager. The Owner may seek, at the cost of the
Project Manager, the assistance of a technical advisor with which the Project Manager will
cooperate and which the Project Manager will provide with any information that the Owner
considers necessary. The Project Manager undertakes to facilitate the exercise of the duties
of the technical advisor and to allow it access to the site. The Owner must procure that any
Person given access under this Clause 7.1 complies with the Project Managers site rules and
must procure that such access does not hinder the Works or the Project.7.2
    Provided that the Owner and the technical advisor comply with the Project Managers site
rules, access by the Owner and the technical advisor to the site does not confer any liability
on the Owner.7.3
    Under Article 553 of the French Civil Code, the Owner, as holder of a right in rem(droit
réel) over the Land and the Assets pursuant to the Lease Assignment, shall acquire title as
owner to all of the work, buildings and Equipment as and when they are completed or delivered.
Regardless of such acquisition of such title, the risks relating to, and the custody of, the
Assets shall remain the responsibility of the Project Manager until the Substantial Completion
Date. 
  8
    FORCE MAJEURE Upon the occurrence of any fortuitous or force majeureevent which does not constitute an
Abandonment for the purposes of Clause 19.1(e), this Agreement shall not be terminated. Page 10 of 74




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The Project Manager shall remain responsible for its assignment under the Agreement whatever the
length of time of the event. 
  9
    INSURANCE9.1
    Insurance(a)
    The Project Manager shall obtain and maintain the following insurance cover from appropriate
solvent insurers with ratings by Standard & Poors Ratings Group of no less than A-, for the
Construction Period (except otherwise specified herein), on a basis consistent with Incos
policies and best practice, providing such cover (including deductions and exclusions) and in
such form and amounts as are customarily obtained for this type of construction project and in
accordance with good business practices:  (i)
    All Risks Marine Cargo insurance, insuring the material, equipment,
machinery, supplies and all other property used for or in connection with the Assets
(except Contractors Equipment) from the time the insured becomes at risk or assumes
interest and during transit and/or in storage, wherever located and until delivered to
final destination being the Project laydown site, including risks of loading and
unloading  anywhere worldwide, against physical loss or damage as per Institute Cargo
Clauses A CL 252 (1/1/82), including Institute War Clauses (Cargo) CL 255 (1/1/82),
Institute Strike Clauses (Cargo) CL 256 (1/1/82, Institute War Clauses (Air Cargo) CL
258 (1/1/82, Institute Strike Clauses (Air Cargo) CL 260 (1/1/82), Institute
Radioactive Contamination Clause CL 356 (1/10/90) and Institute Replacement Clause CL
161 (1/1/34);(ii)
    Construction All Risks (CAR) insurance covering POED against all risks of
direct physical loss or damage. This CAR insurance shall be effective and shall insure
POED while such POED is being transported to the site, excluding ocean marine cargo,
and thereafter until the Substantial Completion Date;(iii)
    Third Party Liability Insurance, on an occurrence basis form, insuring
liabilities arising from bodily injury, death and property damage arising out of the
ownership, construction, erection, installation and maintenance of the Assets. Cover
shall include, but shall not be limited to, blanket contractual legal liability, broad
form property damage (excluding damage to the Assets), occurrence property damage,
personal injury, sudden and accidental pollution, and with respect to completed
operations, cover for a period of twenty four (24) months from the Substantial
Completion Date;(iv)
    any other insurance which may be required by local law, it being understood
that a determination of what is required by local law will be based on a cooperative
analysis by the Project Manager and the Owner and their respective insurance and legal
advisers; and(v)
    terrorism insurance. Page 11 of 74




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(b)
    Notwithstanding the foregoing, it is understood and agreed that under no circumstance shall
the Project Manager be obliged to maintain or be caused to maintain a delay in start-up
insurance.9.2
    The Project Manager shall cause each Insurance Policy to:(a)
    name the Owner, each Member, each Tax Investor, the Security Agent and the Lessor
Administrators as named insured as their interest may appear and as relates solely to the
Assets, but neither the Owner nor any Tax Investor or any Member or the Security Agent or the
Lessor Administrators shall be liable for the payment of such insurance premiums;(b)
    designate the Security Agent as the loss payee on behalf of each named insured in Clause
9.2(a) as their collective interests may appear (but only as such interests relate to the
Assets) except that it is understood and agreed that the Security Agent, the Owner or any Tax
Investor will not be designated as loss payee as regards Insurance Policies covering
liabilities to third parties or insuring the interests of third parties; and(c)
    provide a waiver of all rights of recourse against the Owner, each Tax Investor, each Member,
the Security Agent and the Lessor Administrators and their insurers with respect to their
interests in the Assets and the Owner, each Tax Investor, each Member, the Security Agent and
the Lessor Administrators shall cause their respective insurers to waive any rights of
recourse against the Project Manager and each of its insurers.Each of the parties shall provide the others with documentation evidencing the waivers by
their respective insurers.9.3
    Implementation In respect of the Insurance Policies:  (a)
    Notwithstanding Clause 9.2(b):  (i)
    if the insurance proceeds resulting from any claim under the Insurance Policies
for damage to the Assets (other than damages amounting to a Total Loss) are less than
US$50,000,000 such proceeds will be paid directly to the Project Manager;(ii)
    if the insurance proceeds resulting from any claim under the Insurance Policies
for damage to the Assets (other than damages amounting to a Total Loss) are more than
US$50,000,000, such proceeds will be paid directly to the Project Manager, provided
that the Project Manager provides the Owner as soon as practicable following such
damage to the Assets with a plan which sets out the Project Managers proposal to
reinstate the Assets back to their pre-loss condition, or (subject to the Owners
written consent (such consent not to be unreasonably withheld)) to an equivalent
condition provided that the fitness for purpose of the Assets is maintained;(iii)
    if a Total Loss occurs and the Project Manager has determined within twelve
months of the date of the event giving rise to such Total Loss that the Assets Page 12 of 74




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will be replaced or re-built, then any insurance proceeds resulting from the
resultant insurance claim will be paid directly to the Project Manager, provided
that the Project Manager provides the Owner as soon as practicable following the
Total Loss with a plan which sets out the Project Managers proposal to reinstate
the Assets back to their pre-loss condition, or (subject to the Owners written
consent (such consent not to be unreasonably withheld)) to an equivalent condition
provided that the fitness for purpose of the Assets is maintained;(iv)
    if a Total Loss occurs and the Project Manager has determined within twelve
months of the date of the event giving rise to such Total Loss that the Assets will not
be replaced or re-built, then the Project Manager shall provide the Owner with a letter
of credit issued in favour of the Security Agent by a credit institution with ratings
by Standard & Poors Ratings Group of no less than A- equal in amount to the Tax Loan
Reference TV within five Business Days of the date of such determination, it being
agreed and understood that any insurance proceeds resulting from the resultant
insurance claim will be paid directly to the Project Manager;(v)
    if a Total Loss occurs and the Project Manager has determined that the Assets
will be not be replaced or re-built, and the Project Manager fails to provide the Owner
with a letter of credit on the terms required under paragraph (iv) above, then any
insurance proceeds resulting from the resultant insurance claim to an amount up to the
Tax Loan Reference TV will be paid directly to the Security Agent (acting on behalf of
the Owner and the Tax Investors pursuant to the terms of the Intercreditor Agreement)
as the interests of the Owner and Tax Investors may appear and only as such proceeds
relate to the Assets; and(vi)
    if a Total Loss occurs and insurance proceeds are paid prior to the date on
which the Project Manager has notified the Owner whether it intends to replace or
rebuild the Assets or, if earlier, prior to the date falling twelve months after the
date of the event giving rise to such Total Loss, then unless the Project Manager has
provided to the Owner a letter of credit on the terms required under Clause 9.3(a) (iv)
above, the insurance proceeds up to an amount up to the Tax Loan Reference TV will be
paid directly to the Security Agent (acting on behalf of the Owner and the Tax
Investors pursuant to the terms of the Intercreditor Agreement) as the interests of the
Owner and Tax Investors may appear and only as such proceeds relate to the Assets.  (b)
    In the event of failure by the Project Manager to pay the relevant insurance premiums under
the Insurance Policies, the Owner shall have the right to pay such premiums on behalf of the
Project Manager.(c)
    On or before the date hereof and thereafter as soon as practicable following any request by
the Owner thereafter, the Project Manager agrees to furnish to the Owner a report that
includes in respect of each Insurance Policy:  (i)
    the certificates of insurances signed by the insurers or their authorised
representatives indicating the amount of the cover and the risks covered, confirming
that the provisions set out in Clause 9.3(f) are being complied with and declaring
that all insurance premiums have been paid; and Page 13 of 74




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(ii)
    a certificate signed by a responsible officer of the Project Manager
stating that such insurance is in accordance with this Clause 9.  (d)
    During the occurrence of a Construction Agreement Termination Event (other than an Owner
Construction Agreement Termination Event referred to in Clause 19.1(d) (Total Loss) or a
Project Manager Construction Agreement Termination Event referred to in Clause 19.2(b) (Owner
breach) or Clause 19.2(c) (DGI Final Approval)) which remains unremedied or unwaived), all
transactions and other agreements to be entered into between the Project Manager and any
insurers relating to the determination of the amount of any damage and any other methods of
indemnification for losses under the Insurance Policies which exceed US$ 7,500,000 are subject
to the prior agreement of the Owner.(e)
    To the extent that such provisions are valid and available on commercially reasonable terms,
the Insurance Policies shall provide that:  (i)
    the respective interests of each of the Owner, any Member and any Tax Investor
shall not be invalidated by any act or omission by the Project Manager; and(ii)
    the cover afforded by such Insurance Policies shall not be affected by the
performance of any work on the Assets or by any modification thereto.  (f)
    Subject to availability on commercially reasonable terms, the Insurance Policies shall
contain obligations on the part of the insurer as follows:  (i)
    without prejudice to Applicable Law, to advise the Owner of any delay in the
payment of premiums and not to suspend the agreed cover until one (1) month following
receipt by the Owner of such notice;(ii)
    without prejudice to Applicable Law, to provide the Owner with one (1) months
prior notice of any termination, taking of effect of cancellation or material reduction
of cover which occurs at the initiative of such insurer;(iii)
    not to exercise any rights against the Owner, any Member, any Tax Investor or
the Security Agent and/or the Lessor Administrators relating to any omission,
incomplete information or misrepresentation of the Project Manager or any Contractor
and, consequently, not to raise in defence against the Owner, any Member or any Tax
Investor nullity, average or lapse in the event of a breach of its obligations
committed by the insured subsequent to the loss; and(iv)
    not to avail itself of any clause limiting insurance proceeds to the cost of
the Assets in case of the Assets being constructed on the land of others.  (g)
    Notwithstanding the preceding provisions of this Clause 9, the Owner may at any time take out
of its own initiative and at its own cost any other insurance that it may desire.(h)
    The Project Manager shall obtain and maintain the Insurance Policies and ensure compliance
with Applicable Law through participation by insurers licensed in New Caledonia. Reinsurance
of Insurance Policies will be arranged by the Project Manager and may include reinsurance with
insurers operating outside of New Caledonia. Page 14 of 74




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(i)
    The Project Manager shall declare to the insurer, as the primary named insured, on behalf of
all named insured, including the Project Manager and Owner, all accidents or events likely to
give rise to a claim under the Insurance Policies, in the manner provided for in the Insurance
Policies.9.4
    ModificationThe Project Manager shall not seek to cancel the Insurance Policies or to introduce any
amendment materially reducing the cover thereunder without the prior consent of the Owner
which consent shall not be unreasonably withheld. 
  10
    TOTAL AND PARTIAL LOSS10.1
    Total Loss(a)
    If, at any time on or before the Substantial Completion Date, an event occurs which could
reasonably be expected to constitute a Total Loss, the Project Manager shall notify the Owner
as soon as practicable.(b)
    Within twelve months of the date of the occurrence of an event which gives rise to a Total
Loss, the Project Manager shall notify the Owner as to whether or not the Assets will be
replaced or rebuilt.(c)
    Any other event, damage or loss, which is not a Total Loss must be repaired or reconstructed
pursuant to Clause 10.2.10.2
    Partial Loss and Repair(a)
    If the Assets or any part thereof suffers damage that does not constitute a Total Loss (a
Partial Loss), the Project Manager shall be required to repair, at its own expense, the
damage caused to the Assets and to restore the Assets back to their pre-loss condition, or
(subject to the Owners written consent (such consent not to be unreasonably withheld)) to an
equivalent condition provided that the fitness for purpose of the Assets is maintained.(b)
    The Project Manager shall be responsible for all administrative authorisations and all
expenses necessary for such reconstruction.(c)
    The repair, reconstruction or reinstatement work shall be performed under the Project
Managers full responsibility.(d)
    Subject to Clause 9.3(a) above and in accordance with the Insurance Policies, the insurance
proceeds shall be paid out to the Project Manager, which shall use such proceeds to pay for
the restoration or reconstruction work, which shall be performed under the supervision of the
Project Manager. It is agreed that the Project Manager alone shall be responsible for all
costs (including all Taxes) in connection with the repair or reconstruction work in excess of
the amount of such insurance proceeds. 
  11
    TIME LIMITS FOR COMPLETION OF THE ASSETS11.1
    Substantial Completion Date Page 15 of 74




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(a)
    Subject to Clause 11.1(b), the Project Manager shall cause the Substantial Completion Date to
take place in accordance with Clause 12.3 and by no later than December 31, 2008.(b)
    The Project Manager may postpone the Substantial Completion Date until December 31, 2009 at
the latest, provided however that:  (i)
    it has informed the Owner of the anticipated delay by November 1, 2008 at the
latest; and(ii)
    the DGI has accepted in writing such postponement on or before December 1,
2008.  11.2
    Final Completion Date The Project Manager shall cause the Final Completion Date to take place in accordance with Clause
12.4 and by no later than the date which is the earlier of (i) 24 months after the Substantial
Completion Date and (ii) December 31st, 2010 (the Long-Stop Date).  11.3
    Force majeure Subject to the occurrence of an Abandonment, the time limits provided in Clauses 11.1 and 11.2
shall not be suspended or extended even in the event of an act of God (fortuitous event, or cas
fortuit) or a case of force majeure, including bad weather (intempéries). If, as a result of an act of God or of a case of force majeure, the Project Manager expects not to
meet the time limits provided in Clauses 11.1 or 11.2, the Owner and the Project Manager will,
together with the Tax Investors, meet with a view to:  (a)
    discussing how the Project Manager plans to resume the Works; and(b)
    formulating a plan, if possible in the Owners reasonable opinion, to be implemented by the
Project Manager, to enable the Project Manager to resume the Works and attempt to avoid the
termination of this Agreement and withdrawal of the DGI Final Approval. 
  12
    COMPLETION OF THE ASSETS  DELIVERY  CERTIFICATES12.1
    The Project Manager in its own capacity and as Lessee and the Owner in its own capacity and
as Lessor, agree that the Lessee will operate the Assets under the Lease on and from the
Substantial Completion Date. The Project Manager shall however remain under a duty to perform
its duties under this Agreement and to procure that Final Completion takes place on or before
the Long-Stop Date.12.2
    Completions(a)
    Substantial Completionshall occur when the Works are completed in accordance with this
Agreement and when:  (i)
    the Assets have been built substantially in accordance with the Project Design
Criteria; Page 16 of 74




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(ii)
    each piece or item of equipment constituting part of the Assets has been
installed and tested in accordance with commissioning and testing procedures developed
by the Project Manager;(iii)
    each system, subsystem or operating unit constituting part of the Assets has
been tested and commissioned in accordance with, and as contemplated by, the procedures
developed by the Project Manager using appropriate inert media, or where it is not
practical to use inert media, other appropriate media to confirm that the applicable
system, subsystem or operating unit has been properly tested in accordance with such
commissioning and testing procedures as developed by the Project Manager; and(iv)
    the first autoclave of the Project is ready to accept initial feed for
processing in accordance with the Project Design Criteria.  (b)
    Final Completionshall occur after achievement of the Substantial Completion Date and when
the Production Test has been satisfied.12.3
    Substantial Completion(a)
    When the Project Manager considers that Substantial Completion has been achieved, the Project
Manager, in its own capacity as Lessee, shall notify the Owner and shall represent and warrant
that:  (i)
    the Works and the Assets are operational for the purposes contemplated in the
Lease and the DGI Final Approval;(ii)
    all the necessary Administrative Authorisations have been obtained and are
valid, definitive and enforceable;(iii)
    the declaration of completion of works (declaration dachèvement des
travaux) has been notified to the administrative authorities (a copy of such
declaration in accordance with article 33 of order (deliberation) n°19 dated June 8,
1973, as amended, and a copy of its acknowledgment of receipt by the relevant
administrative authority shall be attached thereto);(iv)
    the Insurance Policies required to be current under this Agreement are current
and the insurance policies required under clause 9 of the Lease are enforceable;(v)
    the Lessee shall bear the risks relating to, and the custody of the Assets in
accordance with the Lease;(vi)
    to the best of the Project Managers knowledge, there is no material
reservation or default other than those listed in an attachment to the notice;(vii)
    the Lessee agrees to take possession of the Assets, accepts them, ratifies any
of the variation orders filed by the Project Manager and recognizes that the warranties
and operating manuals received are sufficient to start the operation of the Assets; and(viii)
    Substantial Completion has occurred. Page 17 of 74




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(b)
    The date of receipt by the Owner of the notice provided under Clause 12.3(a) shall constitute
the Substantial Completion Date, and such notice shall constitute the Definitive Acceptance
Certificate. Substantial Completion shall be deemed to have been agreed respectively between
the Project Manager and the Owner and between the Lessor and the Lessee on the Substantial
Completion Date. For the purpose of securing such agreements, the Project Manager shall act on
behalf of the Owner and in its own capacity and that of Lessee.(c)
    On the Substantial Completion Date the Assets shall be deemed to have been delivered to the
Lessee under the Lease.12.4
    Final Completion(a)
    When the Project Manager considers that Final Completion has been achieved, the Project
Manager, in its own capacity and as Lessee, shall notify the Owner representing and warranting
that:  (i)
    the Works and the Assets are operational for the purposes contemplated in the
Lease and the DGI Final Approval;(ii)
    all the necessary Administrative Authorisations have been obtained and are
valid, definitive and enforceable;(iii)
    the Insurance Policies required to be current under this Agreement are current
and the insurance policies required under clause 9 of the Lease are enforceable;(iv)
    to the Project Managers best knowledge, there is no material reservation or
default other than those listed in an attachment to the notice;(v)
    the Lessee ratifies any of the variation orders filed by the Project Manager;
and(vi)
    the Production Test has been satisfied.  (b)
    The date of receipt by the Owner of the notice provided under Clause 12.4(a) shall constitute
the Final Completion Date, and such notice shall constitute the Final Completion
Certificate. Final Completion shall be deemed to have been agreed respectively between the
Project Manager and the Owner and between the Lessor and the Lessee on the Final Completion
Date. For the purpose of securing such agreement, the Project Manager shall act on behalf of
the Owner and in its own capacity and that of Lessee.12.5
    Defects and defaults The Lessee, for and on behalf of the Owner, shall be authorised from the Substantial Completion
Date and until 12 months after the Final Completion Date, to notify the Project Manager (with a
copy to the Owner) of any defects or defaults that the Project Manager shall rectify as soon as
possible and in any case within 12 months of receipt of such notice. Page 18 of 74




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13
    DOCUMENTS TO BE DELIVERED TO THE LESSEE AND TO BE PUT AT THE OWNERS DISPOSAL13.1
    On the Substantial Completion Date, delivery by the Project Manager to the Owner of the
Definitive Acceptance Certificate shall be deemed to constitute delivery of the signed
Definitive Acceptance Certificate by the Lessee to the Lessor under the Lease.13.2
    On the Substantial Completion Date or as soon as possible thereafter, the Lessee shall be
provided with any warranties for the Equipment as well as any operating manuals, the original
and any electronic versions of which shall be put at the Owners disposal by the Project
Manager in the premises of the latter.13.3
    Within six weeks of the Substantial Completion Date, the Lessee shall have access to the
following documents, the original and any electronic versions of which shall be put at the
Owners disposal by the Project Manager in the premises of the latter:(a)
    any handover certificates (procès-verbaux de reception) required under Applicable Law in
New Caledonia together with any reservations;(b)
    the Definitive Acceptance Certificate together with any reservations;(c)
    the Administrative Authorisations and their application forms;(d)
    the certificates for each Insurance Policy and evidence of the due payment of the premiums
under each Insurance Policy;(e)
    the progress report specified in Clause 5.3 and evidence that each payment due and payable to
each Contractor has been made; and(f)
    the inspection plans (plans de recollement) of the Assets.13.4
    Within 6 weeks as of the Final Completion Date, the Lessee shall have access to the following
documents, the original and any electronic versions of which shall be made available to the
Owner by the Project Manager at the premises of the latter:(a)
    any additional handover certificates (procès-verbaux de reception) required under
Applicable Law in New Caledonia and declared after the Substantial Completion Date together
with any reservations attached thereto;(b)
    the Final Completion Certificate together with any reservations;(c)
    an exhaustive list of the contact details of each Contractor together with the names of their
insurers (if insured);(d)
    the agreements entered into between the Project Manager and the Contractors relating to the
Assets together with any guarantees of such Contractors;(e)
    the progress report specified in Clause 5.3 which shall also contain any necessary
information as to the achievement of the Production Test, and evidence that each payment due
and payable to each Contractor has been made; Page 19 of 74




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(f)
    each Administrative Authorisation issued subsequent to the Substantial Completion Date up to
the Final Completion Date and its application form; and(g)
    the Insurance Policies and evidence of full payment of the premiums by the Project Manager. 
  14
    COMPLIANCE CERTIFICATE14.1
    The Project Manager shall obtain the compliance certificate(s) (certificat(s) de
conformité) provided for in articles 33 and 34 of order (déliberation) n°19 dated June 8,
1973 as amended, within twelve months as of receipt by the administrative authorities of the
declaration(s) of completion of the Works.14.2
    The Project Manager undertakes to perform at its own cost and risk all works and duties
necessary to obtain the compliance certificate(s) as soon as possible.14.3
    The Project Manager shall provide the Owner with the original version(s) of the compliance
certificate(s) within 5 Business Days of its (their) receipt.14.4
    If any administrative authority refuses to issue compliance certificate(s) or if the
compliance certificate(s) is (are) not issued within the time limit provided in Clause 14.1,
the obligation of the Project Manager to obtain the compliance certificate(s) shall continue
in accordance with Clause 15.2(c). In this event, the Owner and the Project Manager
will, together with the Tax Investors, meet with a view to: (a) discussing how the Project
Manager plans to obtain the compliance certificate(s) ; and (b) formulating a plan,
if possible in the Owners reasonable opinion, to be implemented by the Project Manager, to
enable the Project Manager to obtain the compliance certificate(s). 
  15
    TERM15.1
    Subject to Clause 15.2, this Agreement shall commence on the date hereof and shall end,
except as otherwise provided herein, on the Final Completion Date.15.2
    After the Final Completion Date, the Project Manager shall continue:(a)
    to remedy all the defects (if any) identified by the Project Manager in its own capacity and
as Lessee at the time of the handover by the Contractors, following the Substantial Completion
Date or the Final Completion Date;(b)
    to pay the Contractors;(c)
    to obtain any compliance certificate(s); and(d)
    to represent the Owner in any proceedings commenced pursuant to the powers granted to it
under Clause 21. 
  16
    CONSTRUCTION COSTS16.1
    The Owner agrees to pay the Project Manager in connection with its assignment under this
Agreement the Construction Costs. Page 20 of 74




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16.2
    Cost overruns(a)
    If the cost price of the Works (including, for the avoidance of doubt, the cost of labour or
equipment, the costs of any change or increase required by the authorities and any other cost
which comprises and/or is covered by the Construction Costs) exceeds the Construction Costs,
the Construction Costs may, at the Project Managers election, be increased by an amount
including any taxes not exceeding 20% of the Construction Costs (the Cost Overruns),
provided, however, that:  (i)
    the Project Manager notifies the Owner of any Cost Overruns at least 30 days
before the expected Substantial Completion Date;(ii)
    any Cost Overruns shall be funded pursuant to Loan Agreement; and(iii)
    the Cost Overruns shall be fixed as at the Substantial Completion Date and
paid on or before the date falling 30 days after the Substantial Completion Date.  (b)
    If the overruns are anticipated to exceed 20% of the Construction Costs, the Parties shall
meet in order to decide if the excess could be funded by the Lender. If the Parties agree that
such excess could be funded by the Lender, the Project Manager will be entitled to elect that
the Cost Overruns be increased up to the amount so agreed and Clauses 16.2(a)(ii) and (iii)
will apply. 
  17
    TERMS AND CONDITIONS OF PAYMENT17.1
    Payment of the Construction Costs(a)
    The Construction Costs shall be paid by the Owner to the Project Manager by electronic
transfer of immediately available funds to an account that is specified by the Project Manager
no later than 48 hours prior to each scheduled payment date.(b)
    Any payment by the Owner under this Agreement shall be made by the Owner before 11:00 a.m.
(New York time) on the scheduled payment date.17.2
    Terms and conditions of payment(a)
    The Construction Costs shall be paid in Euro (as calculated pursuant to the Applicable
Exchange Rate by the Owner) in four installments on the scheduled payment dates as follows:  (i)
    on the Closing Date: US$ 137,970,000 (Installment 1);(ii)
    on 18 December 2005: US$ 168,630,000 (Installment 2);(iii)
    on 18 December 2006: US$ 204,400,000 (Installment 3); and(iv)
    between the Substantial Completion Date and the date falling 30 days after the
Substantial Completion Date (both dates included), all amounts (if any) required in
respect of Cost Overruns elected by the Project Manager in accordance with Clause 16.2
(Installment 4). Page 21 of 74




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(b)
    The Construction Costs will be paid by the Owner and by the Lender on behalf of the Owner as
follows:  (i)
    Payments by the Owner:The amounts payable by the Owner in respect of each of the four installments set out
in Clause 17.2(a) will be:  -
    in respect of Installment 1: 24.17% x 27% x US$ 511,000,000
denominated in Euro at the Applicable Exchange Rate for 2004;-
    in respect of Installment 2: 26.75% x 33% x US$ 511,000,000
denominated in Euro at the Applicable Exchange Rate for year 2005, multiplied
by the sum of the percentages underwritten by the Tax Investors according to
appendix 6 of the Tax Loan Agreement for that year;-
    in respect of Installment 3: 26.75% x 40% x US$ 511,000,000
denominated in Euro at the Applicable Exchange Rate for year 2006, multiplied
by the sum of the percentages underwritten by the Tax Investors according to
appendix 6 of the Tax Loan Agreement for that year; and-
    in respect of Installment 4: 0.  (ii)
    Payment by the Lender on behalf of the Owner:The difference between (i) each amount mentioned in Clause 17.2(b)(i) as currently
expressed in USD (and which shall be exchanged and paid in Euro) and (ii) each
corresponding installment expressed in USD in Clause 17.2(a), shall be paid in USD
directly by the Lender to the Project Manager, on the Owners behalf, on the
relevant due date.The Parties agree that such payments made in USD by the Lender to the Project
Manager on the Owners behalf shall be deemed to meet the obligations of the Owner
to pay the Construction Costs in Euro.The Project Manager shall confirm in writing to the Owner, using the notification
form attached as Appendix 3, that it received full payment of each installment due
from the Lender in accordance with this Clause 17.2(b)(ii) within 2 Business Days as
of the time limits set forth in Clause 17.2(a).(c)
    Installment 2 will be paid by the Owner subject to the Project Manager providing the Owner
with a copy of the New Building Permit on or before 1st December 2005. 
  18
    REPRESENTATIONS18.1
    The Owner hereby makes the following representations to the Project Manager as at the date of
this Agreement:(a)
    Status: the Owner is a groupement dintérêt économiqueduly organised and validly existing
under the laws of France and the laws applicable in New Caledonia, and it Page 22 of 74




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(b)
    possesses the capacity to sue and be sued in its own name and has the power and authority to
carry on its business and to own its assets and has no immunity from jurisdiction;(c)
    Capacity and authority: the Owner has full legal capacity to execute, deliver and perform its
obligations under this Agreement and each of the other Transaction Documents to which it is a
party and to carry out the transactions contemplated by such documents and all necessary
corporate and other action has been taken to authorise the execution, delivery and performance
hereof and thereof by the Owner; and(d)
    Validity, non-conflict: this Agreement and each other Transaction Document to which the Owner
is a party:  (i)
    has been duly executed and validly delivered by the Owner and constitutes a
valid, legal and binding obligation of the Owner enforceable against the Owner in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganisation, moratorium and similar laws of general application relating to or
affecting creditors rights; and(ii)
    does not violate any provisions of any law or regulation or any judgment, order
or decree of any governmental authority, agency or court having jurisdiction over it.  18.2
    The Project Manager hereby makes the following representations to the Owner as at the date of
this Agreement:(a)
    Status: the Project Manager is a société anonyme,or a société par actions simplifiée(as the
case may be),duly organised and validly existing under the laws of France, acting through its
New Caledonian branch in respect of its operations in New Caledonia (and its New Caledonian
branch is duly organised and validly existing under the laws applicable in New Caledonia) and
it possesses the capacity to sue and be sued in its own name and has the power and authority
to carry on its business and to own its assets and has no immunity from jurisdiction;(b)
    Powers and authority: the Project Manager has full legal capacity to execute, deliver and
perform its obligations under this Agreement and each other Transaction Document to which it
is a party and to carry out the transactions contemplated by such documents and all necessary
corporate, shareholder and other action has been taken to authorise the execution, delivery
and performance hereof and thereof by the Project Manager;(c)
    Binding obligations: the obligations of the Project Manager under this Agreement and each
other Transaction Document to which the Project Manager is a party constitute its valid,
legal, binding and enforceable obligations, subject to bankruptcy, insolvency, fraudulent
transfer, reorganisation, moratorium and similar laws of general applicability relating to or
affecting creditors rights;(d)
    Contraventions: the execution, delivery and performance by the Project Manager of this
Agreement and each Transaction Document to which it is a party does not: Page 23 of 74




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(i)
    contravene any applicable law or regulation or any judgment, order or decree of
any governmental authority, agency or court having jurisdiction over it;(ii)
    result in any breach of any of the provisions of, or constitute a default
under, any agreement or other instrument to which the Project Manager is a party or any
licence or other authorisation to which it is subject or by which it is bound; or(iii)
    contravene or conflict with the provisions of its constitutional documents
(statuts),  in each case, save where such contravention is being contested in good faith, by an
appropriate proceeding;(e)
    Insolvency:the Project Manager has taken no action nor, to its knowledge, have any steps
been taken or legal proceedings been started or threatened against it for winding-up,
dissolution, re-organisation, or bankruptcy;(f)
    No default:so far as it is aware the Project Manager is not in default under any obligation
under any agreement to which it is a party or which is binding on it in a manner or to an
extent which could reasonably be expected to have a material adverse effect on the Project
Managers operations or on the Owners or Tax Investors rights and obligations except where
such default or alleged default is being contested in good faith;(g)
    Litigation: there are no actions, suits or proceedings pending or, to the Project Managers
knowledge, threatened against or affecting the Project Manager which would reasonably be
expected to have a material adverse effect on the ability of the Project Manager to perform
its obligations under the Transaction Documents to which it is a party;(h)
    Authorisations: all governmental authorisations, licences, consents, filings and
registrations required:  (i)
    for the conduct of business trade and ordinary activities of the Project
Manager, in particular the Operating Permit;(ii)
    for the performance and discharge of the obligations of the Project Manager
under the Transaction Documents to which it is a party; and(iii)
    in connection with the execution, delivery, validity and enforceability of the
Transaction Documents to which it is a party,  have been, or, as the case may be, obtained or made, except to the extent that they are not
immediately necessary or failure to receive, benefit from or make the same would not have a
material adverse effect on the operations of the Project Manager;(i)
    Taxes: except as disclosed in writing to the Owner prior to the date of this Agreement: (a)
there are no material disputes pending or, to the Project Managers knowledge, threatened with
governmental authorities in respect of the Project Managers non-payment of Taxes; (b) the
Project Manager has filed or caused to be filed all Tax returns required; and (c) the Project
Manager has paid all Taxes due and Page 24 of 74




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payable on the returns contemplated by this Clause 18.2(i) except in each case (a) to (c)
where (A) the obligation to file or pay is being contested in good faith and by appropriate
proceedings, or (B) the failure to file or pay would not have a material adverse effect on
the Project Managers operations or its ability to perform its obligations under the
Transaction Documents;(j)
    Environment:The Project Manager conducts its operations and assets in New Caledonia and will
construct and commission the Assets in compliance with all applicable Environmental Laws
except where appropriate remedial action acceptable to appropriate regulatory bodies is being
taken; and(k)
    Accounts: the audited financial statements of the Project Manager as of and for the period
ended December 31, 2003 fairly present in all material respects the financial condition of the
Project Manager as of the date of such financial statements in accordance with French
generally accepted accounting principles, and as of the date of this Agreement, except as
disclosed in writing to the Owner (including, without limitation, pursuant to the Disclosure
Letter) or as publicly disclosed prior to the date of this Agreement, since the date of such
financial statements there has been no material adverse change in the financial condition of
the Project Manager. The Project Manager shall be deemed to repeat the representations in Article 18.2 (other than (e)
(Insolvency), (f) (No default), (g) (Litigation), (i) (Taxes), (j) (Environment) and (k)
(Accounts)) on each day of the Construction Period. 
  19
    TERMINATION EVENTS19.1
    Owner Construction Agreement Termination Events During the entire Construction Period, each of the following events shall be an Owner Construction
Agreement Termination Event:  (a)
    Non-payment:the Project Manager does not pay on the due date any amount payable by it under
this Agreement unless the non-payment is remedied within 10 Business Days of written notice by
the Owner;(b)
    Misrepresentation:a representation or warranty made or repeated by the Project Manager in a
Transaction Document is incorrect in any material respect when made or repeated and would
adversely affect the rights of the Owner under this Agreement;(c)
    Girardin Laws benefits:any event which results in the withdrawal or deprivation of the DGI
Final Approval;(d)
    Total Loss:a Total Loss occurs or on before the Substantial Completion Date;(e)
    Abandonment:an Abandonment occurs;(f)
    Unlawfulness:it becomes unlawful for the Project Manager to perform or comply with any of
its obligations under this Agreement or any other Transaction Document;(g)
    Insolvency proceedings or winding-up:the Project Manager: Page 25 of 74




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(i)
    is in a state of suspension of payment (cessation des paiements), has stopped
making payments, has given up, by way of payment, a large part of its assets to its
creditors or has entered into a voluntary agreement (accord amiable) with some of its
creditors which relates to the refinancing of a large part of its indebtedness;(ii)
    becomes subject to a voluntary arrangement procedure (procédure de règlement
amiable) or a judicial recovery proceeding (procédure de redressement judiciaire) (and
the administrator (administrateur judiciaire) nominated in relation with this
proceeding refuses (or is deemed to have refused) the continuation of any one of the
Transaction Documents to which the Project Manager is a party); or(iii)
    becomes subject to a voluntary or mandatory winding-up;  (h)
    Insurance:either:  (i)
    the Project Manager fails to obtain and maintain, or cause to be obtained and
maintained, the Insurance Policies in accordance with Clause 9; or(ii)
    any insurer cancels either of the Insurance Policies described in Clauses
9.1(a)(i), 9.1(a)(ii) and 9.1(a)(iii),  provided that such failure shall not constitute an Owner Construction Agreement Termination
Event if it continues for a period of not more than fifteen (15) Business Days (such period
being extended to twenty (20) Business Days to the extent that the Project Manager is in
good faith seeking to replace or reinstate any Insurance Policy);(i)
    Environmental proceedings:  (i)
    a judicial proceeding is taken against the Owner and/or the Project Manager in
relation to the Assets with respect to environmental damages in an amount exceeding EUR
50,000,000 which is not contested in good faith by either the Owner and/or the Project
Manager as relevant (it being understood that the Project Manager may intervene if not
named in the proceeding to ensure that the proceeding is being contested), or, if it is
contested in good faith, where such contestation is still pending after :  (A)
    in the case of a proceeding against the Project Manager, five
years from its initiation; or(B)
    in the case of a proceeding against the Owner, two years from
its initiation,  except where an expert of international standing appointed jointly by the Parties
has delivered an opinion that such judicial proceeding has no realistic prospect of
success;(ii)
    a judicial proceeding is taken against the Project Manager in relation to any
of its other material assets being part of the Plant with respect to environmental
damages in an amount exceeding EUR 150,000,000 and which: Page 26 of 74




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(A)
    is not contested in good faith by the Project Manager (unless
such contestation is still pending after five years from its initiation); and(B)
    would affect the capacity of the Project Manager to perform its
obligations under this Agreement;  (j)
    Expropriation and requisition:any of the following occurs:  (i)
    expropriation by any governmental authority or any local public body
acting under governmental authority of all or a substantial part of the Assets; or(ii)
    requisition or occupation of all or a substantial part of the Assets
during the Construction Period by any duly-empowered authority or agency for a
period exceeding two years;  (k)
    Transaction Documents unenforceable or terminated:this Agreement or any other Transaction
Document is declared in a final judgment to be unenforceable against any party to the
Transaction Documents other than the Owner;(l)
    Cross-default:any of the following occurs:  (i)
    a Lease Termination Event;(ii)
    an acceleration of the Loan Agreement or the Tax Loan Agreement;(iii)
    any continuing event of default under any Transaction Document
other than the First Demand Guarantee (as such term is expressly defined under
the relevant Transaction Document); or(iv)
    an acceleration under, or early termination of, any Transaction
Document (other than the First Demand Guarantee);  (m)
    Put option:the exercise by the Members of the Put Option pursuant to clause 2.3(b) of the
Put Option Agreement on the Early Option Date;(n)
    Cancellation, expiration or withdrawal of operating and building permits:the Operating
Permit or the Building Permit:  (i)
    is finally and conclusively cancelled, expired or withdrawn; or(ii)
    is suspended for more than 6 months,  and such cancellation, expiration, withdrawal or suspension has the effect of stopping the
construction or the operation of the Plant (provided that such final cancellation,
expiration, withdrawal or suspension is not contested in good faith and that if such
contestation is initiated, it is still pending two years from its initiation);(o)
    Non-compliance with environmental undertakings:the Project Manager does not comply on a
continuing basis with its obligations under Clause 5.1(l) except:  (i)
    where appropriate, remedial action acceptable to appropriate regulatory bodies
is being taken; or Page 27 of 74




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(ii)
    where compliance requirements are being contested in good faith by appropriate
proceedings, provided that the Owner may mandate an expert to determine whether the
condition in this exception (ii) is satisfied;  (p)
    Guarantor Event of Default:the occurrence of a Guarantor Event of Default;(q)
    Non-compliance with the Production Test:the Production Test is not satisfied on or before
the Long-Stop Date;(r)
    Delay:the Substantial Completion Date does not occur by the final date required under, and
as may be extended in accordance with, Clause 11.1;(s)
    New Building Permit:the Project Manager does not provide the Owner with a copy of the New
Building Permit on or before 1st December 2005;(t)
    New Operating Permit: the Project Manager does not provide the Owner with a copy of a new
Operating Permit in respect of the Plant at least 3 months before the Substantial Completion
Date; and(u)
    Non-compliance with DGI Final Approval: the Project Manager or Inco as the case may be fails
to comply in any material respect with its obligations under the DGI Final Approval which are
under its sole control.19.2
    Project Manager Construction Agreement Termination Events During the entire Construction Period, each of the following events shall be a Project Manager
Construction Agreement Termination Event:  (a)
    Increased Costs, Taxes: the Project Manager determines that the consequences to it of its
liabilities in respect of any Increased Cost are excessive;(b)
    Owner breach: a material breach of the Owners covenants under this Agreement excluding the
non-payment of the Construction Costs due to the failure of the Tax Investors or of the Lender
to make any advance, when due, under, respectively, the Tax Loan Agreement and the Loan
Agreement;(c)
    DGI Final Approval: the Owner is in breach of any material requirement imposed on it by the
DGI Final Approval which is under its sole and direct control;(d)
    Variation of Assumptions: the consequences to the Project Manager of its liabilities in
respect of any change of calculation following a variation in the Assumptions have become more
onerous than on the Closing Date;(e)
    Tax Indemnity: the obligations of the Project Manager under the Tax Indemnity have become
materially more onerous than on the Closing Date; and(f)
    Unlawfulness: the Lessor receives a notice in accordance with clause 6.1(a) of the Tax Loan
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20
    TERMINATION20.1
    This Agreement may be terminated prior to its scheduled expiry date as set out in this Clause
20.1.(a)
    Upon the occurrence of a Project Manager Construction Agreement Termination Event (other than
a Project Manager Construction Agreement Termination Event referred to in Clause 19.2(f)), the
Project Manager shall have the right to terminate this Agreement 45 days after the receipt by
the Owner (with a copy to the Tax Investors) of a written notification sent by the Project
Manager stating that such event has occurred (subject to the relevant Project Manager
Construction Agreement Termination Event continuing unremedied by the Owner (in the case of
Clause 19.2(b) or 19.2(c)) or unwaived by the Project Manager).(b)
    Upon the occurrence of a Project Manager Construction Agreement Termination Event referred to
in Clause 19.2(f), the Owner must immediately notify the Project Manager and must keep the
Project Manager informed of the progress of all discussions held in accordance with clause
6.1(b) and/or (c) of the Tax Loan Agreement. If following those discussions, the Owner is
required to make payment of a Take-Out Amount under the Tax Loan Agreement, then the Owner
must immediately notify the Project Manager and this Agreement shall terminate automatically 5
days after the receipt by the Project Manager of such written notification sent by the Owner
stating that the Take-Out Amount is required to be paid (subject to the relevant Project
Manager Construction Agreement continuing unremedied by the Owner or the Project Manager
having exercised its rights under Clause 20.3).(c)
    Upon the occurrence of an Owner Construction Agreement Termination event (other than an Owner
Construction Agreement Termination event referred to in Clause 19.1(d) (Total Loss), Clause
19.1(m) (Put Option) or Clause 19.1(u) (Non-compliance with DGI Final Approval)), the Owner
shall have the right to terminate this Agreement 45 days after the receipt by the Project
Manager (with a copy to the Guarantors) of a written notification sent by the Owner stating
that such event has occurred (subject to the relevant Owner Construction Agreement Termination
Event continuing unremedied by the Project Manager or unwaived by the Owner).(d)
    Upon the occurrence of a Total Loss the Owner shall have the right to terminate this
Agreement six months after the receipt by the Project Manager (with a copy to the Guarantors)
of a written notification sent by the Owner stating that such event has occurred unless:  (i)
    the Owner has received an undertaking from the Project Manager to
reinstate the Assets, together with a plan which sets out the intended
replacement and reconstruction of the Assets;(ii)
    the Owner has received written confirmation from the DGI that it
will not withdraw the DGI Final Approval, such confirmation to have been given
subject to the express conditions that:  (A)
    the Project Manager reinstates the Assets; and Page 29 of 74




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(B)
    the parties to the Transaction Documents are required to
continue their participation in the transactions described therein (and in
particular, that the Tax Loan Agreement is required to continue in accordance
with its terms); and  (iii)
    the Project Manager has paid to the Tax Investors a fee calculated
in accordance with paragraph (5) of appendix 4 of the Lease on the basis of the
number of the days between the date of the occurrence of the Total Loss and the
date of completion of reinstatement of the Assets in accordance with the terms of
this Agreement.  (e)
    Upon the occurrence of the Owner Construction Agreement Termination Event referred to in
Clause 19.1(m) (Put Option), the Owner shall have the right to terminate this Agreement 15
days after the receipt by the Project Manager (with a copy to the Guarantors) of a written
notification sent by the Owner stating that such event has occurred (subject to the relevant
Owner Construction Agreement Termination Event continuing unremedied by the Project Manager or
unwaived by the Owner).(f)
    Following the occurrence of the Owner Construction Agreement Termination Event referred to in
Clause 19.1(u) (Non-compliance with DGI Final Approval), the Owner shall, on giving notice to
the Project Manager, be entitled to terminate this Agreement 6 months after the occurrence of
such Owner Construction Agreement Termination Event provided that neither of the following has
occurred within that 6 month period:  (i)
    the Project Manager or Inco (as the case may be) remedies the
non-compliance of the DGI Final Approval which caused the Owner Construction
Agreement Termination Event pursuant to Clause 19.1(u) (Non-compliance with DGI
Final Approval) to occur; nor(ii)
    the DGI has not indicated its intention to withdraw the DGI Final
Approval (it being acknowledged that on the occurrence of the Owner Construction
Agreement Termination Event pursuant to Clause 19.1(u) (Non-compliance with DGI
Final Approval), the Project Manager will be obliged to notify the DGI as soon as
practicable (with a copy to the Owner).  20.2
    If Clauses 20.1(a) or 20.1(c) applies, then during the 45-day grace period during which the
default may be remedied, the Owner and the Project Manager will meet with a view to
maintaining the Transaction and avoiding recapture of the Tax advantages under the DGI Final
Approval. If the Project Manager and the Owner agree on a plan to maintain the Transaction and
avoid recapture of the Tax advantages under the DGI Final Approval, the grace period of 45
days referred to in Clauses 20.1(a) and 20.1(c) as the case may be will be extended in order
to allow the implementation of such plan.20.3
    Upon the occurrence of a Project Manager Construction Agreement Termination Event set out
under Clause 19.2(f) in relation to an individual Tax Investor, the Project Manager will have
the option to require the Owner to expel the Tax Investor affected by the illegality (if a
solution to that Project Manager Construction Agreement Termination Event is not found in
accordance with clause 6.1(c) of the Tax Loan Agreement) by terminating the Tax Loan Agreement
as far as that Tax Investor is concerned in accordance with clause 6.1(c) of the Tax Loan
Agreement. If Page 30 of 74




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the Project Manager chooses to exercise this option it shall notify the Owner not later than
30 days after receipt of the first notification from the Owner referred to in Clause
20.1(b). In such case, the Owner shall promptly notify the Project Manager of the Take-out
Amount.Subject to the Project Manager having paid to the Owner the Take-Out Amount within 5
Business Days from the notification of the Take-out Amount by the Owner to the Project
Manager, the Project Manager Construction Agreement Termination Event will be deemed to have
been cured and the Tax Investors not affected by such illegality will continue to perform
their obligations under the Transaction Documents.20.4
    In the event of any termination in accordance with Clauses 20.1 and 20.2:(a)
    until the Substantial Completion Date, clauses 22, 23 and 24 of the Lease will apply mutatis
mutandisand references in such clauses to the Lease Term shall be construed as referrers to
the period from the Closing Date to the Substantial Completion Date;(b)
    Clauses 22 and 24 shall survive; and(c)
    the Owner shall transfer the Assets to the Project Manager subject to a retention of title
(vente avec clause de reserve de propriété) and the title of the Assets shall be transferred
to the Project Manager upon payment by the latter of the Termination Compensation (including
insofar as it relates to the Add-Back Indemnity by way of the posting of any Lessee Collateral
as may be required under clause 22.3 of the Lease) as full consideration for such sale. The
retention of title (vente avec clause de réserve de propriété) shall be released on full and
final payment of the Termination Compensation, it being understood that the posting of Lessee
Collateral does not constitute full and final payment of the Termination Compensation. The
Owner undertakes to execute any documentation and take any steps required to effect such
transfer of title to the Assets.The Owner, acting in its capacity as the seller, shall transfer title to the Assets under
the ordinary de factoand legal terms and conditions without any warranty to be offered by
the Owner, in accordance the contents and in the as is condition of the Assets as at the
date of such transfer.The Project Manager shall bear all the costs, duties, levies and taxes in respect of any
such termination and transfer of the Assets.20.5
    If the Project Manager fails to comply with its obligations under Clause 20.4 when due for
performance, the Owner shall have available to it all remedies available under this Agreement
and at law. 
  21
    LEGAL PROCEEDINGS21.1
    To the extent possible under Applicable Law in New Caledonia, the Project Manager shall
bring, in its own name and at its own costs and risks, but on the Owners behalf, any legal
proceedings with respect to the Assets against any third parties, whether as plaintiff or
defendant and shall have full power to start or carry on such proceedings. Page 31 of 74




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As of the Substantial Completion Date, and subject to the provisions of the Lease, the Owner
shall automatically exercise the rights and obligations exercised up to such time by the
Project Manager in accordance with its appointment, with the exception of any legal
proceedings commenced by the Project Manager during the course of its appointment on behalf
of the Owner, which shall be concluded by the Project Manager acting in the interests of the
Owner who shall be informed at all times of any developments in or evolution of such
proceedings.21.2
    The assignment specified in Clause 21.1 shall be automatically terminated (résilié de plein
droit) upon written notice being served by the Owner on the Project Manager.21.3
    The Project Manager shall bear the costs, expenses and consequences of the proceedings
specified in Clause 21.1. 
  22
    WAIVER OF RECOURSE22.1
    Subject to the Exceptions, the Project Manager hereby expressly waives any recourse for any
sum, against the Members, in the event of default by the Owner in the performance of its
obligations under this Agreement.22.2
    The Project Manager hereby undertakes to limit any recourse for any sum, against the Owner to
the Assets and any rights and claims the Owner may have with respect to the Assets, in the
event of default by the Owner in the performance of its obligations under this Agreement.22.3
    The Project Manager acknowledges and agrees that the undertakings contained in this Clause 22
constitute an express, irrevocable waiver of the provisions of article L.251-6 of the French
Commercial Code. In consequence thereof, the Project Manager hereby undertakes, subject to
the Exceptions, to refrain from invoking against any or all of the Members, the capacity of
Members with liability on their own assets for the debt of a groupement dintérêt économique,
before any jurisdiction with respect to the obligations of the Owner under this Agreement.22.4
    The Project Manager hereby undertakes to refrain from taking any action (including the filing
of any claim, petition or motion) with a view to the opening of any of the following
proceedings against the Owner or any or all of the Members:  (i)
    designation as a debtor unable to pay its debts as and when they become due
(cessation de paiements);(ii)
    judicial reorganisation (redressement judiciaire) or judicial liquidation
(liquidation judiciaire) pursuant to articles L. 620-1 and subsequent of the French
Commercial Code; or(iii)
    any other action with respect of the insolvency, winding-up, dissolution,
administration, liquidation, rehabilitation, composition, or any equivalent or
analogous proceedings in France or any other jurisdiction or for an arrangement,
adjustment, composition, protection or relief from creditors action. Page 32 of 74




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23
    TRANSFER OF THE AGREEMENT Without prejudice to the Project Managers rights to contract and sub-contract the performance of
the Works pursuant to this Agreement, neither Party may sell, assign or transfer (collectively,
Transfer) in any form its rights and obligations under this Agreement without the prior written
agreement of the other Party provided that this shall not apply to any Transfer permitted under any
Transaction Document. 
  24
    CHOICE OF LAW  JURISDICTION CLAUSE24.1
    This Agreement is governed by French law. However, Article 1799-1 of the French Civil Code
shall not apply.24.2
    Subject to any specific provisions of this Agreement, and to any mandatory legal provisions
that may apply, the Parties agree to submit to the jurisdiction of the relevant courts located
within the geographical jurisdiction of the Cour dAppel(Court of Appeal) of Paris, in
connection with any and all proceedings and procedures (other than actions in rem).24.3
    In addition, the Courts of Paris shall have exclusive jurisdiction, even in the event of an
impleader (appel en garantie), plurality of defendants or motion on a point of law (demande
incidente). 
  25
    INDEMNIFICATION  25.1
    General Indemnity  (a)
    Subject to Clause 25.1(b), (c), (d) and (e), the Project Manager hereby agrees at all times
to indemnify and hold harmless the Owner for any Loss (including any environmental claim and
any amounts which the Owner is required to pay to any Tax Investor under clause 12 of the Tax
Loan Agreement) other than in respect of Taxes, which the Owner or any Member at any time
suffers or incurs, in its capacity as owner of the Assets or Member (respectively), as a
result of any third party claim (including but not limited to any claim by subcontractors) and
as confirmed by an executory judgment despite appeal (jugement exécutoire malgré lappel) or a
final judgment (jugement ayant acquis lautorité de la chose jugée) it being understood that
the Project Manager shall be consulted as to any decision to file or not any appeal and should
take the final decision whether or not to file such appeal (each such Loss covered by the
indemnity under this Clause 25.1 being an Operational Loss), including, but not limited to:  (i)
    arising directly or indirectly out of or in any way connected with
the purchase, manufacture, ownership, possession, transportation, construction,
management, import, export, storage, insurance, sale, control, use or operation,
design, condition, testing, delivery, leasing, subleasing, maintenance, repair,
service, modification, overhaul, replacement, removal or redelivery of the Assets
or any part thereof by the Project Manager, the Owner or any other Person,
whether or not such Loss may be attributable to any defect in the Assets or any
part thereof or to the design, testing or use thereof or to any maintenance,
service, repair, overhaul, or to any other reason (whether similar to any of the
foregoing or not), and regardless of when the Page 33 of 74




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same shall arise (whether prior to, during, or after termination of, this
Agreement); or(ii)
    arising as a result of any design, article or material in the
Assets or any part thereof or the operation or use thereof constituting or being
alleged to constitute an infringement of any patent, copyright, design or other
proprietary right; or(iii)
    in relation to preventing or attempting to prevent the arrest,
confiscation, seizure, taking in execution, impounding, forfeiture or detention
of the Assets, or in securing the release of the Assets.  (b)
    The indemnification amount (the Indemnification Amount) in respect of an Operational Loss
incurred or sustained by the Owner shall be equal to:  (i)
    the amount of such Operational Loss; less(ii)
    the net amount (after deducting the reasonable costs or expenses to
the Owner in collecting such amount and any Taxes ) paid to the Owner by any
insurer or third party in respect of such Loss; less(iii)
    the amount of any actual reduction in Taxes, or other costs or
expenses of the Owner resulting from such Loss; plus(iv)
    in the event of any cost resulting from Taxes imposed by New
Caledonia, France, the State of Delaware, Canada or any other country in which
the Lender (or successor or assign) or a New Participant is incorporated and
actually borne or incurred by the Owner by reason of the receipt or accrual of
indemnity payments under this Agreement, by such additional amount as shall be
necessary to ensure that the Owner actually receives an amount equal to the
amount it would have received had no such costs been imposed.  (c)
    If, after an Indemnification Amount is paid to the Owner:  (i)
    the Owner receives from an insurer or a third party any amount in
respect of such Operational Loss; or(ii)
    the Owner realises any benefit resulting from such Operational Loss
that, in each case, would have reduced the Indemnification Amount paid in respect
of such Operational Loss pursuant to Clauses 25.1(b)(ii) or 25.1(b)(iii); or(iii)
    the executory judgment despite appeal (jugement éxecutoire malgré
appel) on the basis of which the Owner has received indemnification, is partially
or totally invalidated or the appeal decision confirming such judgment, if any,
is invalidated and the Owner receives any amount in this regard,  then the Owner shall without delay repay to the Project Manager, as applicable, the net
amount so received or the benefit so realised.If, as a result of an executory judgment despite appeal (jugement éxecutoire malgré appel),
the Owner has made payments to the third party by means of funds made available to it by the
Project Manager and such payments could be refundable by such Page 34 of 74




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third party as a result of a final judgment, the Owner shall immediately transfer and assign
to the Project Manager its claim on the third party resulting from such final judgment.(d)
    The Project Manager shall pay any Indemnification Amount to the Owner upon receipt of
documentation supporting that Indemnification Amount.(e)
    The provisions of this Clause 25.1 shall not apply to, and the Indemnification Amount shall
exclude amounts relating to, any loss incurred or sustained by the Owner, which is directly
caused by (and only to the extend that such loss is directly caused by):  (i)
    the gross negligence (faute intentionnelle) or wilful misconduct
(dol) of any Tax Investor or any Member;(ii)
    any failure of a Tax Investor to make or abandon its Tax Advances
in accordance with the Tax Loan Agreement;(iii)
    any breach by a Tax Investor or a Member of any requirement
imposed on it by the DGI Final Approval that is under its sole control;(iv)
    any material breach by the Owner of its covenants under this
Agreement; or(v)
    an imposition on the net income of the Owner,  it being understood that the exclusions under Clauses 25.1(e)(i) to (iv) will apply only to
that Tax Investor or that Member which has defaulted as provided under Clauses 25.1(e)(i) to
(iv) and not to the other Tax Investors or the Members.25.2
    Tax Indemnity(a)
    The Project Manager hereby agrees at all times to indemnify and hold harmless the Owner for:  (i)
    specified losses resulting from payment of a new Tax of any kind or
nature, an increase in the rate of an existing Tax other than the rate of French
Corporate Income Tax, or total or partial deprivation of a Tax advantage or
exemption provided for under the DSF Ruling, in each case imposed by New
Caledonia, France, Canada and any other country, or the State of Delaware, in
which the Lender (or successor or assign) or a New Participant is incorporated
where such event is the result of a Change in Law; and(ii)
    any Tax imposed by New Caledonia which arises from the
non-availability (including as a result of any incorrect or incomplete
assessment) of:  (A)
    the tax treatment set out in the DSF Ruling; or(B)
    the Tax Agreement,  in each case in respect of this Agreement, any of the other Transaction Documents or the
Assets or any part or interest therein or in respect of any transaction contemplated by this
Agreement or any of the other Transaction Documents, including (without limitation) the
purchase, ownership, delivery, leasing, use, possession and operation, Page 35 of 74




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import to or export from any country, return, storage, maintenance, protection, sale,
attempted sale or other disposition of the Assets, or any part or interest therein.(b)
    The Parties shall cooperate to find a position to mitigate the Tax consequences of any
incorrect or incomplete New Caledonian tax assessment.(c)
    The Project Manager shall pay and discharge or cause to be paid or discharged, as soon as the
same become payable, all such Taxes and, if requested by the Owner, produce to the Owner
evidence of the payment and discharge thereof. The Owner agrees to provide any documentation
required to effect the payment or discharge on or prior to the due date.(d)
    The provisions of this Clause 25.2 shall not apply to, and the amount of any indemnity shall
exclude any loss incurred or sustained by the Owner, which is directly caused by (and only to
the extent that such loss is directly caused by):  (i)
    the gross negligence (faute intentionnelle) or wilful misconduct
(dol) of any Tax Investor or any Member;(ii)
    any failure of a Tax Investor to make or abandon its Tax Advances
in accordance with the Tax Loan Agreement;(iii)
    any breach by a Tax Investor or a Member of any requirement
imposed on it by the DGI Final Approval that is under its sole control;(iv)
    any material breach by the Owner of its covenants under this
Agreement; or(v)
    an imposition on the net income of the Owner,  it being understood that the exclusions under Clauses 25.2(d)(i) to (iv) will apply only
to that Tax Investor or that Member of the Owner who will have defaulted as provided
under Clauses 25.2(d)(i) to (iv) and not to the other Tax Investors or the Members.  (e)
    If, after indemnification in respect of Tax has been paid in accordance herewith to the
Owner, the Owner receives a Tax credit or refund in respect of such Tax or realises any
benefit resulting from the indemnification of such Tax, then the Owner shall without delay
repay to The Project Manager the net amount of such credit or refund.25.3
    Conduct of claims The Project Manager and/or Inco shall have full rights, at its election and at its own cost, to
control the conduct of any proceedings with respect to any claims under the indemnities in this
Clause 25 with the Owner having to provide full cooperation with such proceedings and claims,
provided that the Project Manager and/or Inco as the case may be shall keep the Owner fully
informed of the conduct of such proceedings and shall, where reasonably practicable, consult with
the Owner regarding the conduct of such proceedings.  25.4
    Mitigation The Project Manager and the Owner shall use their reasonable endeavours to avoid and mitigate all
Operational Losses, Tax Losses and Add-Back Losses, including the Project Page 36 of 74




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Manager making expenditure of funds and taking action which results in incurring costs. The Owner
is not obliged to take any steps under this Clause 25.4 if, in the opinion of the Owner (acting
reasonably), to do so might require it, or any Member, to expend funds.  25.5
    Consequences of syndication Notwithstanding any provision of this Agreement to the contrary, it is agreed that the Project
Manager shall not be affected by, or required to contribute to, any Loss deriving solely and
directly from the syndication mechanism, as described in the letter from Capstar Partners dated 15
October 2004, as approved by the DGI on 19 October 2004.  25.6
    Specification  For the avoidance of doubt, it is specified that when a claim is made and paid under any provision
of Clause 25, the same claim will not give rise to another payment pursuant to clause 25 of the
Lease. Further, notwithstanding any other provision of this Clause 25, this Clause 25 (other than
this Clause 25.7) shall only be in effect before and including the Substantial Completion Date. 
  26
    COSTS AND EXPENSES26.1
    All the costs, expenses, duties and fees of this Agreement arising after the Closing Date,
and all those that may arise in connection with, or as a consequence of, this Agreement and
incurred after the Closing Date, shall, to the extent that they are not Implementation Costs,
be borne by the Project Manager, which hereby agrees to pay them.26.2
    The Project Manager shall pay within 3 Business Days of demand by the Owner, any amount which
the Owner is required to pay:(a)
    to the Tax Investors:  (i)
    under clause 6.2 (Increased Costs) of the Tax Loan Agreement;(ii)
    under clause 12 of the Tax Loan Agreement; or(iii)
    under clause 21 of the Tax Loan Agreement;  (b)
    to the Lender:  (i)
    in respect of Increased Costs; or(ii)
    under clause 19 of the Loan Agreement, provided the Project Manager shall not be required to pay such amounts which the Owner is required
to pay if such amounts are Implementation Costs or would not be recovered by the Owner under this
Agreement. 
  27
    AMENDMENTS This Agreement may only be amended with the written agreement of each Party. Page 37 of 74




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28
    NO WAIVER It is hereby formally agreed and understood that the fact that any act of forbearance or waiver
that may be made by a Party with regard to the enforcement of this Agreement, whatever the
frequency and/or the duration thereof, shall, unless expressly provided otherwise in writing, in no
event:  (a)
    be deemed to constitute any novation or any amendment or any deletion of the provisions of
this Agreement, or  (b)
    operate to confer any rights, and in each case, except as expressly provided in writing, that Party shall be entitled to put an
end to such act of forbearance or waiver, without any prior notice being required. 
  29
    PARTIAL INVALIDITY In the event that one of the provisions of this Agreement is invalid or becomes impossible to
perform, such event will not affect the validity or performance of any other provision of this
Agreement. 
  30
    CONFIDENTIALITY The Parties shall treat the terms of this Agreement and all information provided under or in
connection with the Transaction, this Agreement and each other Transaction Document (Confidential
Information) as confidential and shall not disclose Confidential Information without the prior
written consent of the other Party, save that consent shall not be required for disclosure:  (a)
    to directors, employees or affiliates of a Party, provided that they in turn are required by
that Party to treat the Confidential Information as confidential in favour of the other Party
on terms substantially the same as those set out in this Clause 30;(b)
    to persons professionally engaged by a Party to the extent required in relation to such
engagement, provided that they in turn are required by that Party to treat the Confidential
Information as confidential in favour of the other Party on terms substantially the same as
those set out in this Clause 30;(c)
    to the extent required by any competent authority having jurisdiction over a Party;(d)
    to any bank, insurance company, other financial institution or rating agency to the extent
required in relation to the financing or insuring of the business activities of a Party,
provided that the bank, insurance company, or other financial institution or rating agency, as
the case may be, is required by that Party to treat the Confidential Information as
confidential in favour of any of the other Party on terms substantially the same as those set
out in this Clause 30;(e)
    to the extent required by any Applicable Law, judicial process or the rules and regulations
of any recognised stock exchange, or to any expert or arbitrator to the extent necessary for
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(f)
    to any intending assignee of the rights and interests of a Party under this Agreement or to a
person intending to acquire an interest in a Party or that Partys affiliate provided that the
intending assignee or acquirer in turn is required by that Party to treat the Confidential
Information as confidential in favour of any of the other Party on terms substantially the
same as those set out in this Clause 30; and(g)
    to the extent that the Confidential Information is in or lawfully comes into the public
domain other than by breach of this Clause 30. 
  31
    CONDITIONS PRECEDENT This Agreement is subject to the fulfillment of the conditions precedent set forth in clause 28 of
the Lease. 
  32
    NOTICES(a)
    Any notice or other communication under, or in connection with, this Agreement shall be in
writing and signed by or on behalf of the Party giving it and shall be deemed to have been
properly served if delivered personally, or by post or facsimile transmission to the following
address or facsimile number:Owner:  GNiFi
BNP Paribas Nouvelle Calédonie
37 avenue Henri Lafleur
BP K3, 98800 Nouméa cedex, Nouvelle Calédonie
Fax:+687.25.84.59
Attention:Bernard MonteilhAnd copied toBNP Paribas-Capstar Partners
37 place du Marché Saint Honoré
75031 Paris Cedex 01, France
Facsimile number: +33 1 42 98 12 03
Attention: Khalid Ammari  Project Manager:  Goro Nickel
7 bis, rue Suffren, BP218
98845 Nouméa Cedex, New Caledonia
Fax number: +687 273 710
Attention: Président Directeur GénéralAnd copied toGoro Nickel
38, rue du Colisée
75008 Paris, France
Attention: Directeur Général Délégué Page 39 of 74




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Facsimile number: +33 1 45 63 29 97And copied to:Inco Limited
145 King Street West
Toronto, ON, M5H 4B7, Canada
Fax number: +1 416 361 7788
Attention: Office of the Secretary  or to such other address or facsimile number as the recipient may have notified to the other
Parties in writing.(b)
    Proof of posting or despatch of any notice or other communication shall be deemed to be proof
of receipt:  (i)
    in the case of a letter sent by post, at 10.00 a.m. on the tenth
(10th) Business Day after posting;(ii)
    in the case of a facsimile transmission, at 10.00 a.m. on the
Business Day immediately following the date of despatch; and(iii)
    in the case of a letter delivered by hand, immediately upon
delivery.  (c)
    References in Clause 32(i) and (ii) to time are to local time in the country of the
addressee.(d)
    A Party may notify the other Parties of a change to its name, relevant addressee, address or
facsimile number for the purposes of this Clause 32, provided that such notice shall only be
effective on the date specified in the notice as the date on which the change is to take
place; or if no date is specified or the date specified is fewer than five Business Days after
the date on which notice is given, the date which is five Business Days after the date on
which notice of change is given. 
  33
    LIST OF APPENDICES Appendix 1:
    
    Definitions;Appendix 2:
    
    Assets; andAppendix 3:
    
    Notification form.
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Made and executed in Paris, In two (2) originals On December 30, 2004. /s/ Yves Roussel
    
    /s/ Khalid AmmariGoro Nickel S.A.
    
    GNiFiName: Yves Roussel
    
    Name: Khalid Ammari
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APPENDIX 1 DEFINITIONS Abandonment
    
    
    
    
    
    means:(a)
    
    at any time prior to the Substantial Completion Date:(i)
    
    the Project Manager voluntarily ceases to perform all
or substantially all construction activities of the Assets
without interruption for a period of 180 days;(ii)
    
    the Project Manager issues at the end of such period a
notice addressed to the Owner:(A)
    
    informing the Owner of such cessation;(B)
    
    indicating its intention to either abandon or resume all
or substantially all construction activities of the Assets
(the Cessation Notice),(it being understood that the Project Manager
undertakes to issue such Cessation Notice at the end of such
period referred to in part (a)(i) of this definition); and(iii)
    
    in the case where the Project Manager has indicated
its intention to resume all or substantially all construction
activities of the Assets, the Project Manager has not resumed
all or substantially all construction activities of the Assets
within a period of 180 days of the date of the Cessation
Notice. For the purposes of this definition, the Project
Manager shall be deemed not to have voluntarily ceased to
perform construction activities of the Assets if such
cessation is caused by the Project Manager Force Majeure; or(b)
    
    as a result of Project Manager Force Majeure:(i)
    
    the Project Manager ceases to perform all or
substantially all construction activities of the Assets
without interruption for a period of 360 days;
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(ii)
    
    the Project Manager issues at the end of such period a
notice addressed to the Owner:(A)
    
    informing the Owner of such cessation; and(B)
    
    indicating its intention to either abandon or resume all
or substantially all construction activities of the Assets
(the FM Cessation Notice),(it being understood that the Project Manager
undertakes to issue such FM Cessation Notice at the end of
such period referred to in part (b)(i) of this definition);
and(iii)
    
    in the case where the Project Manager has indicated
its intention to resume all or substantially all construction
activities of the Assets, the Project Manager has not taken
demonstrable steps to resume all or substantially all
construction activities of the Assets within a period of 180
days of the date of the FM Cessation Notice.Administrative
Authorisations
    
    
    
    
    
    means the Building Permit and the Operating Permit.Agreement
    
    
    
    
    
    means this construction agreement.Appendix
    
    
    
    
    
    means an appendix to this Agreement.Applicable
Exchange
Rate
    
    
    
    
    
    means the spot rate of exchange quoted by the European Central
Bank for the purchase of Euros with US Dollars (US$) as
displayed on the page euro foreign exchange reference rates
at or about 12h30 (Paris time) on 15 December of the relevant year or if such day is not a Business Day, the following
Business Day.Applicable Law
    
    
    
    
    
    means, with respect to any Person or any property or asset,
all laws, ordinances, codes, rules, regulations, orders,
writs, injunctions, decrees or rulings of any governmental
authority and all governmental authorisations applicable to or
binding on such Person (or its properties or assets) or to
such property or asset from time to time.Assets
    
    
    
    
    
    means the assets listed in Appendix 2 and any equipment or
assets which are comprised in the assets listed in Appendix 2.
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Building Permit
    
    
    
    
    
    means the building permit n°98817 2001 0185 issued on 20 March
2002 by the President of the South Province of New Caledonia
for the construction of the Plant and any amendment thereof or
any new building permit or permits replacing in whole or in
part the current building permit, all of them having become
definitive, together with their application files.Business Day
    
    
    
    
    
    means a day, other than a Saturday or Sunday, on which banks
are open for general business in Paris, Nouméa, Toronto and
New York, and (on any day on which it is necessary to
calculate EONIA) Brussels and (on any day on which it is
necessary to calculate LIBOR) London.Call Option
Agreement
    
    
    
    
    
    means the agreement so named between each Member, Inco and the Owner dated on or about the date of this Agreement.Cautionnement
    
    
    
    
    
    means the cautionnement solidairedated on or about the date
of this Agreement between Inco and the Security Agent (on
behalf of the Owner) and each other cautionnement solidaire
entered into pursuant to that cautionnement.CEG Joint Venture
    
    
    
    
    
    means the joint venture of the affiliated companies of SNC
Lavalin Inc. and Foster Wheeler Energy Limited.CGI
    
    
    
    
    
    means the Code Général des Impôts.Change in Law
    
    
    
    
    
    means any change in, deletion from, amendment or addition to
or introduction of, any Applicable Law or regulation or
official directive or any change in the interpretation or
administration of any thereof by any court, tribunal or other
binding competent authority in each case from that existing as
at the date of this Agreement.Clause
    
    
    
    
    
    means a clause of this Agreement.Construction
Agreement
Termination Event
    
    
    
    
    
    means each Owner Construction Agreement Termination Event and each Project Manager Construction Agreement Termination Event.Construction Costs
    
    
    
    
    
    means a fixed amount (forfaitaire) being the Euro equivalent
of US$511,000,000 which covers:(a)
    
    the fees of the Contractors;(b)
    
    the Project Managers fees, costs and expenses (including
the fee of the Project Manager amounting to US$10,000,000);(c)
    
    the design, construction and completion of all of the
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Assets in accordance with the description and the technical
and performance criteria set forth in this Agreement; and(d)
    
    all administrative, insurance, legal, regulatory, tax and
other costs (including the contingency and escalation) in
connection with this Agreement and the design, construction or
completion of the Assets, and which amount shall not be subject to adjustment other than
in accordance with Clause 16.2.Construction Period
    
    
    
    
    
    means the period starting on the Closing Date and ending on
the Final Completion Date.Contractors
    
    
    
    
    
    means any Person including (but not limited to) project
managers, sub-contractors, engineers, researchers,
constructors, suppliers, providers of equipment, providers of
services, technical surveyors and inspection agencies which
have entered into an agreement with the Project Manager as to
the completion of the Works and/or the delivery and the
commissioning of the Assets.Contractors
Equipment
    
    
    
    
    
    means all fixed and mobile equipment and tools used for the
purpose of carrying out the Works, owned, leased or rented for
or by any Contractor or for which any Contractor is legally
responsible.Definitive
Acceptance
Certificate
    
    
    
    
    
    has the meaning given to it in Clause 12.3.Delegations
    
    
    
    
    
    means each of the Rentals Delegation and the Termination Value
Delegation.DGI
    
    
    
    
    
    means the French Direction Générale des Impôts.DGI Final Approval
    
    
    
    
    
    means the final approval to be issued by the DGI and the
French Ministry of Economy and Finance.DSF Ruling
    
    
    
    
    
    has the meaning given to it in the Lease.Early Option Date
    
    
    
    
    
    has the meaning given to it in the Put Option Agreement.Environmental Law
    
    
    
    
    
    means any Applicable Law in New Caledonia regarding:(a)
    
    protection of the environment;(b)
    
    human health or safety as it relates to exposure to
Hazardous Materials; or(c)
    
    the use, handling, release or disposal of Hazardous
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Materials.Exception
    
    
    
    
    
    has the meaning given to it in the Intercreditor Agreement.Euro
    
    
    
    
    
    means the lawful currency of the member states of the European
Union that have adopted or that adopt the single currency in
accordance with the treaty establishing the European
Community, as amended by the Treaty on European Union.Final Completion
    
    
    
    
    
    has the meaning given to it in Clause 12.2(b).Final Completion
Certificate
    
    
    
    
    
    has the meaning given to it in Clause 12.4(b).Final Completion
Date
    
    
    
    
    
    has the meaning given to it in Clause 12.4(b).First Demand
Guarantee
    
    
    
    
    
    means the first demand guarantee dated on or about the date of
this Agreement between the Security Agent (on behalf of the Tax Investors) and Inco and each other first demand guarantee
entered into pursuant to that first demand guarantee.Guarantor
    
    
    
    
    
    means Inco and each New Participant.Guarantor Event of
Default
    
    
    
    
    
    has the meaning given to it in the First Demand Guarantee.Hazardous Material
    
    
    
    
    
    means any substance listed, defined, designated or classified
as hazardous, toxic, radioactive or dangerous, or otherwise
regulated, under any Environmental Law, whether by type,
concentration or by quantity, including petroleum, petroleum
product, asbestos, lead, polychlorinated biphenyls and smoke.Implementation
Costs
    
    
    
    
    
    has the meaning given to it in the Tax Loan Agreement.Inco
    
    
    
    
    
    means Inco Limited, a Canadian corporation having its
registered office at 145 King Street West, Toronto, ON, M5H
4B7, Canada.Increased Cost
    
    
    
    
    
    has the meaning given to it in the Loan Agreement.Insurance Policies
    
    
    
    
    
    means the insurance policies specified in Clause 9.1(a).Intercreditor
Agreement
    
    
    
    
    
    means the agreement so named dated on or about the date of
his Agreement between, among others, the Owner, the Project
Manager, each Tax Investor, each Member, the Lender, each
Guarantor and the Security Agent.
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Land
    
    
    
    
    
    means the real property in New Caledonia on which the Assets
are to be located.Lease
    
    
    
    
    
    means the French financial lease (crédit-bail) dated on or
about the date of this Agreement between the Project Manager, as lessee and the Owner, as lessor.Lease Assignment
    
    
    
    
    
    means the assignment, dated on or about the date of this
Lease, between the Project Manager and the Owner, of the
rights and obligations over the Land as vested in the Lessee
under the Long-term LeaseLender
    
    
    
    
    
    means Goro Funding, LLC, a limited liability company formed
under the laws of the State of Delaware.Lessee
    
    
    
    
    
    means the Project Manager in its capacity as lessee under the
Lease.Lessor
    
    
    
    
    
    means the Owner in its capacity as lessor under the Lease.Loan Agreement
    
    
    
    
    
    means the agreement so named dated on or about the date of
this Agreement between the Lender, as lender, and the Owner,
as borrower.Long-Stop Date
    
    
    
    
    
    has the meaning given to it in Clause 11.2.Long-term Lease
    
    
    
    
    
    means the bail emphytéotique dated 7 December 2004 between
the Project Manager, as lessee, and New Caledonia, as lessor.Loss
    
    
    
    
    
    means any loss, liability, claim, damage, cost or expense.Materials
    
    
    
    
    
    means, for the purposes of the definition of POED only, all
materials, equipment, supplies and other items, intended to
form part of, and/or required for the operation or maintenance
of, the Permanent Works, to be supplied by the Contractors.Member
    
    
    
    
    
    means each member of the Owner (or any successor or assign of
such member).New Building Permit
    
    
    
    
    
    means the building permit for the construction of the Plant to
be issued by the administrative authorities further to the
application form filed by the Project Manager on or about 2
December 2004.New Participant
    
    
    
    
    
    means a Person who is a New Participant as defined under the
First Demand Guarantee and the Cautionnement.
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Operating Permit
    
    
    
    
    
    means the operating permit (autorisation dexploiter une
installation classée pour la protection de lenvironnement)
n° 1769-2004/PS issued on October 15, 2004 by the President of
South Province of New Caledonia for the operation of the Plant
and any amendment thereof or any new operating permit or
permits replacing in whole or in part the current operating
permit, all of them having become definitive, together with
their application file.Owner
    
    
    
    
    
    has the meaning given to it in the Preamble.Owner Construction 
Agreement
Termination Events
    
    
    
    
    
    has the meaning given to it in Clause 19.1.Partial Loss
    
    
    
    
    
    has the meaning given to it in Clause 10.2.Permanent Works
    
    
    
    
    
    means, for the purposes of the definition of POED only, the
permanent structures, installations and other works to be
designed, constructed and completed as part of the Project.Permitted Liens
    
    
    
    
    
    means:(a)
    
    the respective rights and interests of the Parties and to
all contracts referred to in this Agreement;(b)
    
    liens of the Public Treasury that are being contested in
good faith and by appropriate proceedings duly conducted, so
long as such proceedings do not: (i) involve any danger of
foreclosure, forfeiture or loss of the Assets, or any part
thereof or interest therein or any substantial danger of the
sale of the Assets or any parts thereof or interest therein;
or (ii) interfere with the enjoyment, possession or
development of the Assets or any part thereof or rights
therein; and(c)
    
    the liens of architects, contractors, masons and all other
workmen employed for the construction of the Assets or for any
Work or modifications or arising in the ordinary course of
business for amounts that are not more than 30 days past due
or which are being contested in good faith by appropriate
proceedings.Person
    
    
    
    
    
    means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated
organisation, governmental entity (whether or not having
separate legal personality).Plant
    
    
    
    
    
    means the nickel-cobalt processing plant comprising a
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portion of the Project.POED
    
    
    
    
    
    means property of every description (except Contractors
Equipment) including the Assets, the Permanent Works and the
Temporary Works associated with and/or materials incorporated
in Assets that are required for or in connection with the
construction of the Project.Preamble
    
    
    
    
    
    means the preamble of this Agreement which forms an integral
part of this Agreement.Preliminary Works
    
    
    
    
    
    has the meaning given to it in Clause 1.2.Production Test
    
    
    
    
    
    means the production by the Project, over a continuous period
of 30 days occurring prior to the Long-Stop Date, of a total
of a least 2,600 tonnes of contained nickel in oxide form and
220 tonnes of contained cobalt in carbonate form (such amounts
representing 60% of the Assets expected capacity and the
amount of 220 tonnes of cobalt being adjusted to reflect any
difference between the grade of cobalt in the ore actually
mined and the grade assumed by Inco).Project
    
    
    
    
    
    means the nickel-cobalt mine, Plant, and supporting
infrastructure being constructed, and to be operated by the
Project Manager in the South Province of New Caledonia.Project Design
Criteria
    
    
    
    
    
    means the written
project design criteria developed by the Project Manager for the Assets as may be amended and updated
from time to time by the Project Manager.Project Manager
Force Majeure
    
    
    
    
    
    means:(a)
    
    the concept of force majeuresuch as defined under French
law and construed under French jurisprudence, being an
unforeseeable (imprévisible), external (extèrieur) event
or circumstance that is beyond the control of the Project
Manager which it could not have avoided or overcome
(irrésistible) and which makes it impossible for the Project
Manager to construct and/or operate all or substantially all
of the Assets and including, without limitation, events such
as for example climatic events, civil war, revolution, acts of
war or terrorism;(b)
    
    the events set out in the DGI Final Approval including
unforeseeable major technological and technical difficulties
beyond the control of the Project Manager and Inco provided
that such difficulties are confirmed by an independent expert;
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or(c)
    
    strikes.Project Manager
Construction
Agreement
Termination Events
    
    
    
    
    
    has the meaning given to it in Clause 19.2.Put Option
    
    
    
    
    
    has the meaning given to it in the Put Option Agreement.Put Option
Agreement
    
    
    
    
    
    means the agreement of that name between each Member, Inco,
and the Lessee dated on or about the date of this Agreement.Rentals Delegation
    
    
    
    
    
    means the delegation of claims (acte de délégation imparfaite)
dated on or about the date of this Agreement and entered into
between the Owner, as grantor (délégant), the Project Manager,
as delegated debtor (débiteur délégué), and the Lender as
beneficiary (délégataire) pursuant to which the Owner
delegates the Project Manager to the Lender with respect to
the Owners rights and claims relating to the Rent.Request for DGI
Final Approval
    
    
    
    
    
    means the request for
approval of the Transaction filed with the DGI and pursuant to which the DGI Final Approval is to be
issued.Security Agent
    
    
    
    
    
    means the security agent appointed by the Tax Investors, the
Owner and the Lender under the Intercreditor Agreement and
acting for them and on their behalf.Services Agreement
    
    
    
    
    
    means each of the agreements between the Project Manager and
CEG Joint Venture in relation to the provision of services
(including the Works) to the Project Manager for the Project.Substantial
Completion
    
    
    
    
    
    has the meaning given to it in Clause 12.2(a).Substantial
Completion Date
    
    
    
    
    
    has the meaning given to it in Clause 12.3(b).Take-out Amount
    
    
    
    
    
    has the meaning given to it in the Tax Loan Agreement.Tax or Taxes
    
    
    
    
    
    means all forms of taxation whether direct or indirect and
whether levied by reference to income, profits, gains, net
wealth, asset values, turnover, added value or other reference
and statutory, national or supranational, governmental, state,
provincial, local governmental or municipal impositions,
duties, contributions, rates and levies (including without
limitation customs duties, social security contributions and
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any payroll taxes), whenever and wherever imposed (whether
imposed by way of a withholding or deduction for or on account
of tax or otherwise) and in respect of any person and all
penalties, charges, costs and interest relating thereto.Tax Advance
    
    
    
    
    
    has the meaning given to it in the Tax Loan Agreement.Tax Loan Agreement
    
    
    
    
    
    means the agreement so named dated on or about the date of
this Agreement between the Owner, the Tax Investors and the
Tax Investors Agent.Tax Investors
    
    
    
    
    
    has the meaning given to it in the Tax Loan Agreement.Tax Investors Agent
    
    
    
    
    
    has the meaning given to it in the Tax Loan Agreement.Taxable Base
    
    
    
    
    
    means for a Person (other than an individual) with a
registered place of business in metropolitan France, the
amount of such Persons taxable corporate income as determined
in accordance with article 209(I) of the CGI (or any successor
provision thereof) for purposes of calculation of the amount
of Taxes such Persons corporate income tax liability under
article 219(I) of the CGI (or any successor provision
thereof).Temporary Works
    
    
    
    
    
    means, for the purposes of the definition of POED only, all
temporary works or facilities of every kind required for or in
connection with the execution of the Project.Termination
Compensation
    
    
    
    
    
    has the meaning given to it in the Lease.Termination Value
Delegation
    
    
    
    
    
    means the delegation of claims (acte de délégation imparfaite)
dated on or about the date of this Agreement and entered into
between the Owner, as grantor (délégant), the Project Manager,
as delegated debtor (débiteur délégué), and the Tax Investors
and the Lender, as beneficiaries (délégataires), pursuant to
which the Owner delegates the Project Manager to the Tax
Investors and the Lender with respect to the Owners rights
and claims relating to the Termination Value and the purchase
price under clause 26 of the Lease.Total Loss
    
    
    
    
    
    means:(i)
    
    the Assets are completely physically destroyed; or(ii)
    
    the Assets are destroyed to an extent that it is deemed
more economic to replace rather than repair the
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Assets;and in each case as certified by an expert jointly appointed
by the Owner and the Project Manager.Transaction
    
    
    
    
    
    means the transaction comprising:(d)
    
    the assignment pursuant to the Lease Assignment;(e)
    
    the construction and commissioning of the Assets by the
Project Manager, acting as project manager under this
Agreement, and the incremental acquisition by the Owner of
title to the Assets as they are constructed, pursuant to this
Agreement; and(f)
    
    the Lease.Transaction
Documents
    
    
    
    
    
    means the Lease, this Agreement, the Loan Agreement, the Tax
Loan Agreement, the First Demand Guarantee, the Cautionnement,
the Delegations, the Put Option Agreement, the Call Option
Agreement, the Long-term Lease, the Lease Assignment, the
Intercreditor Agreement and the letter from Inco to the
Security Agent (on behalf of the Owner) dated on or about the
Closing Date regarding the obligations of the Lender under the
Loan Agreement.US$, USD and US
Dollars
    
    
    
    
    
    means the lawful currency for the time being of the United
States of America.Variation
    
    
    
    
    
    means any additional or supplemental work which shall require
the filing of an Administrative Authorisations as required by
all Applicable Laws in New Caledonia.Works
    
    
    
    
    
    means any works or services to be carried out or provided with
a view to completing and commissioning the Assets.
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APPENDIX 2 ASSETS Page 53 of 74




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APPENDIX 2 A LIST OF THE ASSETS The Assets will comprise the following units of the Plant:-
    
    Unit 215;-
    
    Unit 220;-
    
    Unit 240;-
    
    Unit 245;-
    
    Unit 250; and-
    
    Unit 285.
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APPENDIX 2 B MAP OF THE ASSETS [NOTE: MAP NOT INCLUDED IN THIS VERSION] Page 55 of 74




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APPENDIX 2 C SCOPE BOOK Page 57 of 74




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(GORO NICKEL LOGO)
    
    Goro Nickel Project
    
    (CEG LOGO)Phase2BReportAppendix A: Scope Book
 Area 215: Feed Thickening Area 220: Pressure Leaching Areas 215 and 220 are addressed together because the slurry enters Area 220 from 210 for
preheating, then proceeds to Area 215 for thickening, and finally returns to Area 220 for
further heating, pressure acid leaching and pressure letdown. Purpose Areas 215 and 220 are designed to:  
    heat the feed slurry to about 93°C prior to thickening;
    thicken the slurry exiting the low temperature heaters;
    store hot, thickened slurry at 90°C;
    further heat the slurry to about 259°C prior to pressure acid leaching:
    leach the heated slurry at 270°C with the appropriate addition of sulphuric acid
(H2SO4) in mechanically agitated autoclaves to extract nickel and
cobalt; and
    depressurise the leached slurry in flash vessels, while recovering steam for direct
heating of the incoming slurry as described in the first and fourth points above. Description Refer to PFDs CEG01-215-8110-20-0120 to 0122 for Area 215, and CEG01-220-8110-20-0130 to
0140 for Area 220. The ore slurry is delivered to Area 220 from Area 210 via the pipeline and is preheated in
the direct heater section of three low temperature (LT) heater/flash vessels (210-PRV-
111/211/311, 5,504mm heater PD x 21,400mm tan/tan), arranged in parallel, using flashed
low pressure steam from the integrated low pressure flash vessels (5220mm PD). At base
case conditions, approximately 166t/h of slurry enters each vessel at a temperature of 63°C
and is heated to approximately 93°C by contact with the low-pressure flashed steam.
Preheating the ore slurry facilitates thickening and permits slurry feed of a higher
density to be sent to the pressure leach circuit. The preheated slurry is thickened in
five 20m dia x 19.8m high deep bed thickeners (215-THK-005 to 009) operating in parallel.
The thickener underflow, at 37% solids by weight, is pumped to the
four 20.6m dia x 21.1m
high agitated autoclave feed storage tanks (215-TNK-001 to 004), each with a surge capacity
of 6,000m3. The thickener overflow solution is pumped back for use as process
water in the FPP (Area 210) via two-stage pumps (210-PPP-001 to 004, duty/standby) and a
10km long carbon steel pipeline for use as process water. One LT heater is associated with
each leach train. There are three identical
leach trains in the pressure acid leach area; the description
that follows refers to the first train but also applies in principle to each of the other
trains. Where the trains differ in principle, additional description is provided for
clarification. Page 58 of 74




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(GORO NICKEL LOGO)
    
    Goro Nickel Project
    
    (CEG LOGO)Phase 2B ReportAppendix A: Scope Book
 The preheated and thickened ore slurry is pumped by a single stage centrifugal pump
(215- PPS-009/010, duty/stand by) from the autoclave feed tanks to the heater section of
the intermediate temperature (IT) heater/flash vessel
(220-PRV-112, 4,020mm
heater PD x 16,550mm tan/tan). Steam from the integrated intermediate pressure flash
vessel (3600mm PD) heats the slurry. Slurry discharges the IT heater at 151°C and is
transferred by three stage centrifugal pumps (220-PPS-115 to 120, duty/standby sets) to
the heater section of the high temperature (HT) heater/flash vessel (220-PRV-113, 4,160mm
heater PD x 17,430mm tan/tan), where it is heated by steam from the integrated
high-pressure flash vessel (3654 PD). The heated slurry at 200°C is then pumped into the
autoclave via a live steam trim direct heater (220-PRV-114, 2,500mm
PD x 5,400mm tan/tan).
Two high-pressure positive displacement pumps (220-PPD-101/102) operating in parallel are
used to transfer the slurry from the HT heater discharge through the trim heater to the
autoclave. The trim heater raises the slurry temperature to 259°C. The autoclave feed
density is reduced by contact with condensing steam to 27.6% solids by weight. The slurry is leached with H2SO4 at an approximate ratio of 122kg
acid for each tonne of ore, in a six-compartment autoclave (220-ALV-100, 4,300mm PD x
25,845mm tan/tan) at high pressure (5,900kPa) and high temperature (270°C). Sulphuric acid
is delivered to each of the first three autoclave compartments using one positive
displacement high-pressure acid pump (220-PPD-003/004/005) for each compartment. Sulphuric
acid is fed directly to the pump suctions from the sulphuric acid storage area (Area 330).
The nominal H2SO4deliveries to the first, second, and third
compartments of the vessel are 25m3/h, 7.2m3/h and
3.6m3/h, respectively. The slurry/acid mixture cascades through the six agitated compartments of the autoclave.
Dual impellers driven by 75kW motors agitate each of the first three
compartments; 37kW
motors drive the agitators in each of the final three compartments. Complete dissolution is
required to maximise liberation of nickel and cobalt as sulphates. Slurry residence time
in the autoclave is 30 minutes. Nickel and cobalt extractions from the ore into solution
are approximately 94.5% and 93.5% respectively. The leached slurry discharges the final
autoclave compartment at 270°C and 22% solids by weight. Each agitator shaft is equipped with a cartridge type, dual-pressurised mechanical seal. A
circulating barrier fluid of demineralised water lubricates and cools the seals. The return
seal water from the six agitators is cooled in a seal water cooler (220-HXS-423) which is
shared by the three trains. Seal water for the autoclave agitator seals and HT heater feed
pump mechanical seals in all three trains is supplied from a common 165m3
autoclave seal water tank (220-TNK-404). Each set of autoclave agitator seals has a
duty/standby positive displacement seal water pump set (220-PPP-101/102, 201/202,
301/302). A single duty/standby pump set (220-PPP-407/408) provides high-pressure seal
water for the HT heater feed pumps of all three trains. The leached slurry flows from the final autoclave compartment into a flashing circuit. The
pressure and temperature of the slurry are progressively reduced as it passes in order
through the flash sections of the HT, IT, and LT heater/flash vessels (220-PRV-113, 220-
PRV-112 and 220-PRV-111). In each pressure let-down stage, the flashed steam rises from the
flash section of the vessel into the heater section to pre-heat incoming slurry, thus
recovering heat from the slurry depressurization process. In the LT vessel the slurry
flashes to near boiling point at ambient pressure. Page 59 of 74




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(GORO NICKEL LOGO)
    
    Goro Nickel Project
    
    (CEG LOGO)Phase 2B ReportAppendix A: Scope Book
 The vent gases from the three-heater/flash vessels and the autoclave are handled as
follows:  
    LT heater/flash vessel vent gas is sent directly to the vent gas
scrubber (220-SBW-102) for gas cleaning and discharge to atmosphere;  
    IT heater/flash vessel vent gas and autoclave vent gas are collected in a ceramic-lined
continuous vent vessel (220-SPC-111) for pressure let-down prior to being sent to the vent
gas scrubber; and  
    HT heater/flash vessel vent gas passes through a knockdown tank (220-VEP-111) to
separate condensate prior to being sent to the power plant (Area 350) for waste heat
recovery. The condensate from the knockdown tank is combined with the scrubber
condensate and returned to the thickener overflow surge tank (215-TNK-008) in Area
215. The slurry from the final flash vessel is discharged to a leach discharge pump box
(220-PBX- 401) common to the three trains. Trains 1 and 2 require pumps to transfer the
slurry from the final flash vessel to the pump box; slurry in Train 3 flows by gravity.
From the pump box, the slurry is pumped to the counter-current decantation washing
thickeners (220-PPS-403/404) for separation of the barren solids from the pregnant leach
solution. This slurry is at approximately 101°C and 28% solids by weight. The pregnant
leach solution contains approximately 7g/l of nickel and 0.8g/l of cobalt. Page 60 of 74




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(GORO NICKEL LOGO)
    
    Goro Nickel Project
    
    (CEG LOGO)Phase 2B ReportAppendix A: Scope Book
 Area 240: Partial Neutralisation Purpose The partial neutralisation (PN) circuit is designed to:  
    neutralise the excess acid in the CCD thickener overflow PLS with lime and limestone;  
    precipitate the majority of impurities such as iron, aluminium, chromium and silica;  
    separate the neutralised and partially purified solution from the precipitated
impurities;.
    filter and wash the resulting precipitate before treatment in the ETP; and  
    collect and clean the CO2 off-gas resulting from the neutralisation process
and compress/liquefy part of this CO2 off-gas for use in the solvent-extraction
area. Description Refer to PFDs CEG01-240-8110-20-0160 to 0163. The thickener overflow from the CCD circuit is treated with limestone and lime using a two-
stage neutralisation circuit to neutralise excess acid. Impurities such as iron, aluminium,
chromium, and silica are also removed. (The limestone and lime are prepared as slurries in
separate limestone and lime plants). Iron and chromium in particular would be detrimental to
downstream unit operations if not removed in partial neutralisation. Limestone slurry is used for the first stage and slaked lime for the second stage. PLS is pumped from the first CCD thickener overflow tank at a base case flow of
1358m3/h
to a distribution box (240-TNK-010) above two 625m3
mechanically agitated tanks (240-TNK- 002/031) operating in parallel. If required PLS is
heated to 65°C using a direct steam eductor. Sulphur dioxide (SO2)
gas is injected via a static mixer into this overflow stream before it enters the first
distributor tank immediately after the pumps. SO2 reduces any chromium from the
hexavalent (Cr6+) state to the stable trivalent (Cr3+) state allowing
it to precipitate as a hydroxide. An SO2 / air blend may be added to the reactor
tanks to improve the oxidation rate. Limestone slurry is dosed at a rate of 125t/h solids to both of these tanks and
neutralisation of the majority of the free H2SO4 in the PLS takes place.
Reaction of the limestone with acid evolves carbon dioxide (CO2) gas and
precipitates gypsum solids. Some of the CO2 is recovered for subsequent
compression for use as a blanketing gas in the solvent extraction circuit. A small
(8m3/h) flow of regenerated solution from the Area 245 Cu IX circuit is added to
this reactor. Further neutralisation of acid continues in the third and fourth tanks by
dosing more limestone slurry. Tanks 240-TNK-003 and 004 have live capacities of
1655m3
and 1700m3 respectively and each has a residence time of 60
minutes. Low-pressure air from Area 280 is injected to these two tanks at a rate of
7,364m3/h to oxidise ferrous iron (Fe2+) to ferric iron
(Fe3+) forming a hydroxide precipitate. Page 61 of 74




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(GORO NICKEL LOGO)
    
    Goro Nickel Project
    
    (CEG LOGO)Phase 2B ReportAppendix A: Scope Book
 Slurry from the 240-TNK-004 flows by gravity at a base case flow rate of
1,699m3/h into the feed box (240-TNK-047) of the 40m dia. first-stage thickener
(240-THK-001). The gypsum and iron solids contained in this slurry settle and are
compressed to a higher density slurry in the 45m dia. x 3.5m high thickener. Flocculant
solution is added to the diluted feed slurry stream to facilitate slurry settling. Slurry
at a density of 30% solids is withdrawn from the thickener as underflow slurry and is
pumped at a base case rate of 497m3/h to the 840m3capacity belt
filter feed surge tank (240-TNK-011). A portion of the underflow slurry
(146m3/h) is recycled as seed to the distribution tank. The solution component of
the feed slurry overflows the thickener at a base case rate of 1,571m3/h and
flows by gravity into an overflow tank (240-TNK-025). First stage thickener flocculant is supplied from the Area 230 flocculant storage tank by
duty/standby flocculant pumps (230-PPD-003/004). Carbon dioxide evolved in the first two neutralisation tanks is scrubbed prior to removal of
water in a knockout pot (240-VAR-017). CO2 flows to Area
245 - Copper Removal,
or is compressed by CO2 compressors for downstream use in Area 250 Solvent Extraction. The
Co2 package provides for storage and vaporisation of liquid CO2. Slurry in the belt filter
feed tank is pumped to four
120m2 horizontal belt filters
(240-FLB-001 to 004) that operate in parallel Three stages of counter current washing are
used to maximise recovery of soluble nickel and cobalt. Four vacuum pumps (240-PPU-001 to
004) apply vacuum to the filters, which remove entrained solution as filtrate and results
in a cake forming on top of the filter cloth. First stage filtrate solution containing nickel and cobalt is recycled to the
first stage PN thickener. Second and third stage filtrate solution is used as wash water on
the filter. Process water is used as the third stage of wash solution. Washed and dewatered
filter cake from each filter is transferred by screw conveyor (240-CVS-001 to 004) at a
combined rate of 220t/h solids to two mechanically agitated repulping tanks (240-
TNK-029/030). Process water from the process water dam is used to repulp the filter cake to
a density of 35-40% solids. Repulped filter cake slurry is pumped to the effluent treatment
circuit (Area 280) by centrifugal pumps (240-PPS-007/008). An automatic sampler extracts a
sample from this material for metallurgical accounting procedures. Thickener overflow from the first-stage PN thickener overflow tank is pumped to the first of
three second-stage PN reactor tanks (240-TNK-007 to 009) connected in series, each of
1,215m3 capacity and a residence time of 45 minutes. Slurry from the Area 245 PN
clarifier is pumped to this first tank at a rate of 15m3/h. A recycle seed
stream of underflow slurry from the second stage PN thickener (240-THK-002) is also pumped
to this tank. Slurry from the first of the PN neutralisation tank overflows to the second tank, which in
turn overflows to the third reactor tank. Injection of air (1342m3/h) from Area
280 low-pressure blowers and the addition of slaked lime slurry (2t/h solids) into these
tanks results in precipitation of the remaining iron and aluminium, and a significant
portion of the dissolved copper. An SO2 / air blend may be added to the reactor
tanks to improve the oxidation rate. Page 62 of 74




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(GORO LOGO)
    
    Goro Nickel Project
    
    (CEG LOGO)Phase 2B ReportAppendix A: Scope Book
 Slurry from the last PN reactor tank overflows by gravity to the 31m dia.
second-stage partial neutralisation thickener (240-THK-002) at a base case flow rate of
1,616m3/h. Solids contained in this slurry settle and are compressed to a higher
density slurry in the thickener. Slurry settling is facilitated by the use of flocculant
solution which is added to the diluted feed slurry stream. Slurry (18m3/h at a
density of 30% solids) is removed from bottom of the thickener and is pumped to the first
CCD thickener in Area 230 for recovery of nickel and cobalt precipitated during the
addition of slaked lime. Flocculant solution is made up in batches in a vendor supplied package comprising a dry
flocculant storage bin, powder wetting and mixing tank before transfer to a 14m3
storage tank (240-TNK-044). Flocculant to PN thickener No.2 is delivered by flocculant
distribution pumps (240-PPD-003/004). Thickener overflow from the second stage partial neutralisation thickener flows by gravity
to the PN clarifier in Area 245 at a base case flow rate of 1,582m3/h. Page: 63 of 74




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(GORO NICKEL LOGO)
    
    Goro Nickel Project
    
    (CEG LOGO)Phase 2B ReportAppendix A: Scope Book
 Area 245: Copper Removal Purpose The copper removal operation
is designed to:  
    clarify the neutralised solution from Area 240;
    inject hot water into the clarified solution to minimise gypsum precipitation;
    remove copper impurities through Ion Exchange columns;
    de-aerate the copper free solution;
    carbonate the resulting solution; and
    provide surge and steady flow to SX1. Description Refer to PFDs CEG01-245-8110-20-0201 and 0202.  
    Calcium ManagementNeutralised PLS from Area 240 overflows the second-stage PN
thickener (at base case flow of 1,582m3/h) via launder to the feedwell of the 35m dia. PN clarifier
(245-THK- 001). The liquor is dosed with flocculant from the Area 240 flocculant
package by flocculant distribution pumps (240-PPD-003/004. The underflow slurry is
returned to Area 240 to the first stage of partial neutralisation. The clarifier
overflow travels by launder to the copper ion exchange feed tank (245-TNK-002) that
provides 625m3 of surge capacity between Areas 240 and 245.Following reaction with lime and limestone in Area 240 the calcium concentration in the
neutralised PLS is above the solubility limit of gypsum. Heat is lost through pipes
and tank walls, so the temperature and gypsum solubility of the PLS falls. The
downstream process equipment is therefore prone to scale deposition on wetted
surfaces.The PLS is diluted by water heated by steam injection (245-EJS-001) in the copper
removal feed tank. Water lowers the calcium sulphate concentration below the
solubility limit. If the PLS temperature is above the design operating temperature of
SX1 extraction, cooler filtered water can be injected into the copper ion exchange.
The steam and water may dissolve solids in the PLS to allow lower back washing
frequency in the copper ion exchange columnsSpent scrub solution is returned from Area 250 to the copper ion exchange (Cu IX) feed
tank to decrease the calcium concentration of PLS prior to feeding to the ion exchange
columns. PLS is pumped to the PLS ion exchange trains by centrifugal pumps
(245-PU-030/031). Page 64 of 74




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(GORO NICKEL LOGO)
    
    Goro Nickel Project
    
    (CEG LOGO)Phase 2B ReportAppendix A: Scope Book
  
    Copper Ion ExchangeCopper is removed from PLS to prevent poisoning of the solvent in SX1. The ion
exchange resin selectively loads copper above nickel. The copper ion-exchange columns
are loaded in series to ensure that copper breakthrough is prevented. Seven trains of
columns are operated in parallel to achieve design throughput without excessive
pressure drop across the resin beds. Each train consists of three columns.  
    245-IEX-101 to 103;
    245-IEX-2D1 to 203;
    245-IEX-301 to 303;
    245-IEX-401 to 403;
    245-IEX-501 to 503;
    245-IEX-601 to 603; and
    245-IEX-701 to 703,  Each ion-exchange train continually receives PLS. When the copper concentration on the
resin in the lead column of each train reaches its absorption limit the loaded lead
column is taken offline for copper removal. The other columns in the train remain in
service. Copper free solution discharging each train is manifolded to the 3.6m dia x
6.8m high PLS degas vessels (245-PRV-001/002). Solution that is outside the dissolved
copper specification is sent to the recycle solutions tank (245-TNK-009) for transfer
to Area 240 for retreatment.The sequence of treating loaded columns includes:  
    back wash with water to recover the nickel-rich solution within the resin bed and
column freeboard. Spent backwash solution pumped to Areas 240 or 280 via the
recycle (245-TNK-009) or discharge tank (245-TNK-010) respectively;
    elution with dilute H2SO4to remove the copper and
residual nickel from the resin. Spent eluate flows to the discharge solutions
tank and is pumped to Area 280 as effluent for treatment; and
    regeneration with copper free PLS to restore the nickel concentration on resin
prior to copper loading. The PLS is recycled from the SX1 feed pumps (245-PPP-
007 to 009). Spent solution from regeneration of the resin is pumped to the
recycle solutions tank and returned to Area 240.  The regenerated column is returned to service as the trailing column in the respective
train. The first flush of PLS through the reinstated column is directed to the recycle
solution tank for return to Area 240 to ensure that no copper passes to SX1 while the
resin bed settles into service. Page 65 of 74




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(GORO NICKEL LOGO)
    
    Goro Nickel Project
    
    (CEG LOGO)Phase 2B ReportAppendix A: Scope Book
  
    Gas Treatment of LiquorThe gas dissolved in solution received from Area 240 varies depending on the
instantaneous process conditions. The PLS becomes progressively richer in dissolved
air as it passes through tanks in Areas 240 and 245 as a result of
its CO2
content being depleted by air sparging in Area 240. The O2 content is
depleted from PLS to decrease solvent degradation that arises by its reaction with
extractant in the circulating solvent in Area 250. The CO2 in the SX feed
minimises the consumption of expensive, high purity CO2 cover gas in Area
250. De-aeration is performed in two parallel PLS degas vessels (245-PRV-001/002) in
which the PLS is distributed across the vessel void under vacuum. The vacuum
maintains a low O2 partial pressure within the vessel to promote
O2 removal from the PLS. The dissolved gases in the PLS are released into
the vacuum stream and are exhausted to atmosphere via the vacuum pumps. The degassed
PLS is then pumped through eductors (245-EJS-002/003) which contact CO2
(from Area 240) with the PLS, and then through inline static mixers
(245-MXS-003/004). The retention and mixing facilitate CO2 absorption in
the PLS before discharging into the SX feed tank (2450TNK-003). Constant PLS
throughput during upstream flow restrictions is achieved by recycling PLS from the SX
feed tank as required to maintain a steady gas to liquid ratio and maintain adequate
CO2 contact with the PLS.The 100m3 SX feed tank provides surge capacity between Areas 245 and 250.
Excess CO2 from the PLS is released to blanket the tank freeboard space.The copper free and O2 depleted PLS is supplied to the solvent extraction
columns in Area 250 by variable speed pumps (245-PPP-007 to 009) via a pipe header.
The liquor is delivered at constant pressure to ensure regulation of flow rate to
individual columns. A side stream of SX feed can be diverted to Cu IX for resin
regeneration as required. Page 66 of 74




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(GORO NICKEL LOGO)
    
    Goro Nickel Project
    
    (CEG LOGO)Phase 2B ReportAppendix A: Scope Book
 Area 250: Primary Solvent Extraction SX 1 Purpose The purpose of the primary solvent-extraction circuit is to selectively recover the nickel
and cobalt contained in the copper-free pregnant leach solution and concentrate them in a
hydrochloric acid (HCI) solution. Description Refer to PFDs CEG01-250-8110-20-0210 to 0215. PLS from Area 245 is treated to recover the metal values through a primary solvent
extraction circuit (SX1) including extraction, scrubbing and stripping. Nickel, cobalt and
zinc are efficiently concentrated and transferred from sulphate based PLS to hydrochloric
acid based strip solution; separation and purification is performed in downstream
processing. Trace impurity metals including iron and manganese are co-extracted with the
nickel, cobalt and zinc. Copper and chrome are removed from the PLS in upstream processes
in Areas 245 and 240 respectively. The three SX1 sections all utilise pulsed columns to contact the solvent and aqueous inputs
in counter current flow. Each pulsed column system comprises:  
    a tall central column section containing disc-and-doughnut internals;
    a top settler where the organic overflows into a discharge weir;
    a bottom settler where the aqueous phase is
discharged;
    a pulse leg, where pressurised air creates a pulsating action on the liquid in the
column;
    an air receiver, where pressurised air is accumulated prior to discharge to the column;
    an air manifold, where the air pulses are generated; and
    a water-cooled refluxing vent condenser to condense and recover organic vapours in the
off-gas. The first section involves
the extraction of metals into the organic phase. This extraction is selective against alkali metals such as calcium and magnesium, which remain in the aqueous
phase, or raffinale. Seven parallel columns (250-PCO-001 to 007) are installed. Extraction
columns are 27m high, and have central column dimensions of 4m dia. x 16m high. In the second section the loaded solvent is scrubbed with dilute
H2SO4 to remove any remaining iron and manganese that have been
co-extracted with nickel and cobalt into the organic phase. The spent scrub acid aqueous
solution is recycled either to the SX1 feed or to Area 240. Four parallel columns
(250-PCO-020 to 023) are installed. Scrub columns are 16m high and have central column
dimensions of 4m dia. x 6m high. Page 67 of 74




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(GORO NICKEL LOGO)
    
    Goro Nickel Project
    
    (CEG LOGO)Phase 2B ReportAppendix A: Scope Book
 The scrubbed solvent is stripped of metals into an aqueous stream of regenerated HCI
from Area 270; the stripped solvent is returned to extraction. Eight parallel (250-PCO-008
to 015) columns are installed with an allowance for four future columns. Strip columns are
37m high and have central column dimensions of 4m dia. x 26m high. Dissolved metals are extracted by di-thio phosphinic acid (DTPA) which is supplied as the
proprietary reagent Cyanex 301. This extractant is dissolved in the
kerosene diluent Isopar M.  
    ExtractionThe copper-free PLS from Area 245 is supplied as SX feed from the primary SX feed
pumps (245-PPP-007/008/009). Surge capacity is provided in the 1000m3 surge
tank (245-TNK-003) to smooth short-term process fluctuations. The solution has been
depleted of
O2 and
saturated with
CO2 in Area 245 to reduce the
potential for solvent degradation.The PLS from Area 245 is supplied to a header at a base case flow of
1,627m3/h from where it is distributed into each of the operating pulse
columns. The stream is pumped at controlled pressure to ensure stable flow control to
individual columns. A side stream of PLS is directed to regeneration of the copper ion
exchange resin as required.Stripped solvent is pumped to the bottom of the extraction columns at a base case flow
of 145Cm3/h and dispersed by the pulsing action. The organic phase rises
against the flow of PLS before exiting via a circumferential weir to the loaded
organic header. The loaded solvent for each column is collected in the header and
piped to the scrub columns.The metal depleted aqueous solution or (raffinate) flows at 1,629m3/h to
parallel multimedia filters (250-MLF-001 to 004) for recovery of entrained organic
prior to transfer (250-PPP-012 to 014) to Area 280 for treatment.  
    ScrubbingSolvent scrubbing aims to dislodge iron and manganese from DTPA without excessive
removal of nickel and cobalt. Scrub solution is pumped at a base case rate of 2
m3/h from the 15m3 scrub solution feed tank (25Q-TNK-063). The
acid make-up to the tank is controlled by dilution of concentrated
H2SO2
with filtered water in a static mixer (250- MXS-002). The scrub solution acid strength
can be varied to optimise the removal of metals from the solvent. The scrub solution
is supplied at controlled pressure (250- PPP-130/131) to a header from where it is
distributed into each of the operating pulsed columns.The organic/aqueous flow ratio through individual scrub columns can be varied by
pumping the scrub solution from each bottom decanter to join the fresh scrub solution
at the top of the same active column. The four scrub columns (250-PCO-020 to 023) each
have a single aqueous recycle pump (250-PPP-090 to 093). This solution recycle flow
(334m3/h) is larger than the advance scrub flow to provide efficient phase
mixing. The recycle stream in each of the four columns is heated by direct steam
injection (250-MXS-005 to 008) to maintain the process temperature and raise the
temperature of the scrubbed solvent to that required for stripping. Page 68 of 74




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(GORO NICKEL LOGO)
    
    Goro Nickel Project
    
    (CEG LOGO)Phase 2B ReportAppendix A: Scope Book
 Loaded solvent flows via a common header to the bottom of the scrub columns and is
dispersed by the pulsing action. The loaded solvent rises against the flow of scrub
solution before exiting via a circumferential weir to the scrubbed organic header. The
scrubbed solvent for each column is collected in the header and pumped (250-PPP-040 to
043) to the strip columns. The impurity bearing solution
(spent scrub) is pumped (250-PPP-088/089) at a base case
rate of 2m3/h to two parallel multimedia filters (250-MFL-008/009) for recovery
of entrained organic. The cleaned spent scrub is piped to its destinations in Area 245 for
dilution of the PLS and recovery of nickel and cobalt, or Area 240 to bleed the impurities
from SX1. The scrub liquor also assists with calcium (Ca) dilution of the PLS prior to Cu
IX.  
    StrippingScrubbed solvent is pumped to a pipe header and then into the bottom of the eight
strip columns (250-PCO-008 to 015) via valves and dispersed by the pulsing action.
The organic phase rises against the flow of strip solution before exiting each
column via a circumferential weir to a discharge header.The stripped solvent for each column is collected in the header and piped to the
900m3capacity stripped organic surge tank (250-TNk-058). Aqueous
entrainment is drained from this surge tank and pumped via air drive positive
displacement pump 250-PPP- 122 as required to the strip solution feed header.The strip solution is regenerated HCI from Area 270 that has been scrubbed in carbon
columns (250-CCL-001 to 003) and premixed with make-up concentrated HCI in a static
mixer (250-MXS-003). The strip solution is pumped (250-PPP-060/061) from its feed
tank (250-TNK-010) to a header pipe at constant pressure, then through control valves
into each of the operating pulse columns. The strip flow rate ratio is monitored and
controlled from the solvent flow rate with adjustment for the nickel plus cobalt
grade on scrubbed solvent.The loaded strip solution flows at a base case rate of
68m3/h to parallel
multimedia filters (250-MLF-005/006) for recovery of entrained organic, before it is
piped to the Ni/Co/Zn solution tank (250-TNK-012). The loaded strip solution is
pumped (250-PPP- 038/039) to Area 255 for zinc removal.DTPA is oxidised by O2 that enters the organic phase, the major source
being the feed PLS. Any O2 that does not react in the solvent may reach
the freeboard of columns or tanks and can be purged by high purity CO2
from the Area 240
CO2 compression/storage package. Oxidation of DTPA degrades the
solvent performance both reversibly and irreversibly. The regeneration section
provides treatment for reversible degradation. Make-up with fresh Cyanex 301 from the
air-driven positive displacement SX1 extractant pump 250-PPP-071 allows for
irreversible degradation of DTPA. Page 69 of 74




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(GORO NICKEL LOGO)
    
    Goro Nickel Project
    
    (CEG LOGO)Phase 2B ReportAppendix A: Scope Book
  Pulsing air is delivered from a common battery of blowers (250-FAB-001 to 005)
that supply SX1 and SX2. Each column has its own receiver, valving and pressure
regulation arrangement to control pulsing amplitude and frequency. The pulse air is
exhausted to atmosphere through the same valves. The pulse air supply is cooled with
cooling water to the process operating temperature through a heat exchanger
associated with each blower (250-HXS-001 to 005).
    Organic Recovery and RegenerationEach of the aqueous streams that exit Area 250 pass through multimedia filters to
recover entrained solvent. The filter beds are backwashed of residual entrainment
regularly. The major portion of the organic phase from the filters is purged as
required to a 20m3 conical bottom recovered organic separation tank
(250-TNK-016). The solvent is separated from the aqueous content of the streams by
settling in this tank and pumped to the regeneration facility (250-PPP-075). The
carry over of aqueous phase is drained from the tank and pumped (250-PPP-076) to
effluent.The dirty backwash streams that contain sulphates from the raffinate and spent scrub
filters are collected in the
175m3 SX1 extraction dirty backwash tank
(250-TNK-037). The accumulated sulphate backwash is pumped (250-PPP-100/101) to a
secondary multimedia filter (250-MFL-007) for further cleaning.The dirty backwash stream that contains chlorides from the loaded strip filters is
collected in the 15m3 SX1 chloride-settling tank (250-TNK-015). The pooled
organic phase is decanted over an internal weir and pumped to the organic separation
tank (250-TNK-016). The recovered solvent streams are combined in this tank before
transfer to the regeneration facility. The aqueous phase is drained from the settling
tank and pumped to join the fresh strip solution for recycle to the strip columns.
Pumps in this section are air-driven positive displacement type.Loaded solvent is bled as required from the extraction columns and flows to the
regeneration facility. An impure organic stream can also be received from the
recovered organic separation tank. The organic stream is contacted with water in a
wash tower (250-CMW-001) and overflows to the agitated conical tank-reactor (250-TNK-027). The wash water is drained to the regeneration effluent tank (250-TNK-026)
and pumped back to the SX1 recovered organic separation tank (250-PPP-026).The regeneration reaction rate is maintained by circulating (250-PPS-007) reactor
contents through a heat exchanger (250-HXS-025). A charge of nickel powder is
transferred from a tote bin (250-BIN-001) to the reactor by a screw feeder (250-FEM-001). After each batch the reactor contents is settled and the residual nickel powder
falls to the tank floor while the regenerated solvent is decanted. The nickel powder
is re-suspended in subsequent regeneration batches and re-used. Page 70 of 74




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(GORO NICKEL LOGO)
    
    Goro Nickel Project
    
    (CEG LOGO)Phase 2B ReportAppendix A: Scope Book
 The regenerated solvent is separated from any nickel powder carryover by filtration.
After a selected number of batches the reactor is completely drained of all nickel powder,
which is also filtered. The reactor discharge is pumped through the filter (250-FLP-002)
into the SX1 regeneration product tank (250-TNK-028). The cleaned regenerated solvent is in
turn pumped (250-PPP-082) to the SX1 stripped organic surge tank to join the main
circulating stream. Filtered powder can be washed with water to assist organic recovery.
The residual nickel powder is discharged as a cake by opening the filter plates and transferred via
screw conveyor to drums. This solid waste is sent for disposal. Page 71 of 74




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(GORO NICKEL LOGO)
    
    Goro Nickel Project
    

(CEG LOGO)Phase 2B ReportAppendix A: Scope Book
 Area 285: Effluent Treatment Refer to PFDs CEG01-285-8110-20-0281 to 0283. Waste streams from the following Areas report to a distribution box (285-TNK-002) and flow
by gravity to the first of three acidic liquor neutralisation reactors:  
    Area 250 SX1 raffinate; and
    Area 350 CFPP and OFSPP effluent. Effluent treatment in Area 285 is a multi-stage process involving neutralisation of the SX1
raffinate sulphate stream from Area 250 with limestone slurry in two mechanically agitated
reactors (285-TNK-010, 011) followed by neutralisation with slaked lime slurry in the
agitated third reactor (285-TNK-012). Each reactor has a capacity of
1,125m3
and a nominal retention time of 30 minutes. Limestone slurry is drawn from the plant ring
main and is used to neutralise the majority of the H2SO4 in the
effluent streams. Lime slurry drawn from the plant ring main is used to neutralise any
remaining H2SO4 in the effluent stream and precipitate most of the
remaining soluble metal sulphates. Spent chemicals from the water treatment plant are also neutralised. Decant water from the
tailings dam can report to the third neutralisation reactor. Air from low-pressure blowers
(280-FAB-O01, 002, 003) located in Area 280 is sparged into these neutralisation reactor tanks to oxidise any soluble divalent iron (Fe2+)
to its trivalent (Fe3+) form and enable its precipitation as a hydroxide.
Ferrous sulphate solution from the Area 280 storage tank (280-TNK-006) can be dosed to the
third neutralisation reactor to reduce any hexavalent chromium to trivalent chromium that
may be contained in the decant water. Chromium (3) hydroxide is precipitated. At the
increased pH in the lime reactor, manganese and magnesium hydroxide precipitate as solids. The neutralised stream from
the third neutralisation reactor flows to a 57 m dia. x 4.5m high effluent treatment thickener. Thickener overflow solution containing <100mg/L of
manganese flows by gravity to the 295m3 chloride tank (285-TNK-017) where it
combines with chloride containing streams. Retention time is 30 minutes Zinc is
precipitated by addition of slaked lime slurry from the ring main. A number of other streams shown below contain chlorides:  
    Area 245 copper IX solution discharge;
    Area 250 SX1 chloride effluent;
    Area 260 Zinc IX and SX2 aqueous waste (usual destination);
    Area 270 pyrohydrolysis scrubber effluent; and
    Area 350 CFPP and OFSPP effluent A significant portion of the
thickener overflow (neutralised effluent) is pumped (285-PPP-017/018) to the process water pond. Most of this stream is used as wash solution in the
Area 230 CCD circuit. Decant water is usually sent directly to the process water dam. Page 72 of 74




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(GORO  NICKEL LOGO)
    
    Goro Nickel Project
    

(CEG LOGO)Phase 2B ReportAppendix A: Scope Book
 Part of the underflow from the effluent treatment thickener is pumped
(285-PPP-031/032) to Area 280 where it is combined with other solids streams to tailings. A
portion of the effluent thickener underflow stream is recycled to the first neutralisation
reactor in Area 285 as seed. Neutralised effluent from the agitated chloride tank flows to the two parallel effluent
treatment lamella clarifiers (285-TNK-008, 009) to remove
residual solids, which are pumped to Area 280 for
disposal in the tailings dam. Final effluent overflows from the clarifiers to the effluent
head tank (285-TNK-016). Outfall discharge pumps (285-PPP-015, 016) deliver the effluent
via an overland pipeline to the ocean outfall at the Canal De La Havannah where a diffuser
disperses the clear and neutralised effluent at the sea bed. Seawater recovered from the
port is pumped into the head tank to reduce scale formation in the pipeline. Page 73 of 74




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APPENDIX 3 NOTIFICATION FORM To:
    
    GniFiBNP Paribas Nouvelle Calédonie37 avenue Henri LafleurBP K3, 98800 Nouméa cedex, Nouvelle CalédonieFax:+687.25.84.59Attention:Bernard MonteilhBNP Paribas-Capstar Partners37 place du Marché Saint Honoré75031 Paris Cedex 01, FranceFacsimile number: +33 1 42 98 12 03Attention: Khalid AmmariFrom:
    
    Goro Nickel
 Date: [] Goro Nickel Construction
Agreement dated 30 December 2004 (the Construction Agreement ) Dear Sir, We refer to Clause 17.2(b)(ii) of the Construction Agreement. For the purpose of this letter, capitalised terms and expressions (whether in singular or in plural
form) shall have the respective meanings given to them in the Construction Agreement. We hereby confirm that we received from the Lender on [] the amount of US$[] which, together with
the part of Installment [1/2/3] paid by the Owner pursuant to Clause 17.2(b)(i), represents the
full payment of Installment [1/2/3/4]. Yours faithfully Page 74 of 74